Why do we call alpha a nonmarket return premium? Why are high-alpha stocks desirable investments for active

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Why do we call alpha a “nonmarket” return premium? Why are high-alpha stocks desirable investments for active portfolio managers? With all other parameters held fixed, what would happen to a portfolio’s Sharpe ratio as the alpha of its component securities increased?

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Investments

ISBN: 9780073530703

9th Edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus

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