Your question is Accounting for Costs in Signal Evaluation. Take a moment with it on the right.
Talk me through your thinking if you like. When you're confident, submit your answer and I'll grade it like a real screen (7/10 or better passes).
How do you account for transaction costs and market impact when evaluating a theoretical signal?
Explain how you would convert a frictionless signal return into an implementable net return, distinguishing explicit costs from price impact. Address how the assumptions should enter backtests, portfolio construction, and the decision to deploy or reject the signal.
