Question

How would you trade Blackstone to both generate positive alpha and earn a positive market risk...

How would you trade Blackstone to both generate positive alpha and earn a positive market risk premium at the same time after one year?

Buy it if its price is lower than its fair price today

Short sell it if its price is lower than its fair price today

Short sell it if its price is higher than its fair price today

Buy it if its price is higher than its fair price today
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Answer #1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

If actual price< Fair price then buy,

Otherwise, sell.

You earn positive Alpha in both these cases:

1. Buy it if its price is lower than its fair price today.

2. Short sell it if its price is higher than its fair price today.

However out of this both cases you earn a positive market premium by going long on black stone.

Hence Answer is:

Buy it if its price is lower than its fair price today.

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