Which of the following is not one of the six key assumptions about alpha being a zero-sum game?

Alpha being a zero-sum game implies that the gains of one investor necessarily come at the expense of another; thus, any profit generated through skillful investment decisions is negated by losses elsewhere in the market participants. The key assumptions help to outline the conditions under which this zero-sum nature holds true.

Identical tax rates for all investors ensures that tax implications do not skew performance comparisons, making it easier to determine if alpha is truly being generated. Identical investment horizons mean all investors are holding the same assets for the same duration, allowing for a fair and direct comparison of performance. No transaction costs ensures that the focus remains purely on skill and performance rather than external factors that could dilute the assessment.

In contrast, the assumption that all investors have unlimited resources is not plausible in the real world. Investors typically operate with varying degrees of capital, influencing their ability to invest and take positions in the market. This variability can impact alpha generation and competitive dynamics, making it an unrealistic assumption not essential to the zero-sum game framework. Therefore, the lack of this assumption aligns with the intent to create a more realistic understanding of market mechanics and the conditions surrounding alpha generation.