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Portfolios 506: Factor Investing

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1.
What is beta?
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How strongly an asset's returns move with the market's returns. How strongly an asset's returns move with the market's returns.
2.
Style investing is a kind of factor investing that deals with _______.
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Two factors -- size (large-small) and value (value-growth).
3.
What is a factor?
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An attribute of an asset that both explains and produces excess return. An attribute of an asset that both explains and produces excess return.
4.
Once researchers identify an investment strategy that replicates alpha, what will happen to that alpha?
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It will become beta. What was once considered alpha will become beta (or perhaps some other factor) once it is replicated by a known strategy.
5.
Research has found that the stronger the factor attribute (such as momentum, quality, etc.), _______.
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The higher the excess return. The stronger the factor attribute, the higher the excess return.