Asked by IRINA FEIJOO CALVAO on Jun 12, 2024

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An investor should do which of the following for stocks with negative alphas?

A) go long
B) sell short
C) hold
D) do nothing

Negative Alphas

A metric indicating that an investment has underperformed relative to its benchmark, adjusted for the level of risk.

Go Long

An investment strategy where an investor buys shares or securities with the expectation that their price will rise over time.

Sell Short

The sale of a security that the seller does not own at the time of the sale, typically with the intention of buying it back later at a lower price to make a profit.

  • Analyze the effectiveness of portfolio management by employing risk-adjusted benchmarks.
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EN
Ealan NisanovJun 19, 2024
Final Answer :
B
Explanation :
Stocks with negative alphas underperform the market, so an investor should sell short to take advantage of the expected decline in the stock's value.