1. Why does looking at a securitys historical return off little help in determining whether a stock will have alpha in the future? Do the historical returns offer us any useful information at all, or are they completely useless?

2) PBYIs current BID-ASK is $59.00 - $60.00. PBYI is going to release their annual report tomorrow; you have special skill in valuing biotech companies, and you believe that PBYI has an expected alpha tomorrow of 2% compared to the markets current best estimate of fair value. Should you buy PBYI? What if the expected alpha was 0.5% instead of 2%... Would this change your answer?