the way I think of Alpha is…Alpha = actual - expected, but when I approach a Q…I get tripped up. I am confusing the wording…
What is a different way to approach this Q?
Here is an example: I almost opted for answer D. …which would have been wrong. Any thoughts? and thank youu
Hi, it sounds like your understanding is correct and that you have the general idea! The wording here is reversed from how you’re calculating it, but the logic is still sound.
Think of it this way: if the security is projected to return less than initially expected, the current value is too high (“overvalued”) and needs to be adjusted downward.
I think I am understanding. Thank you!