The Small-Firm Effect

question 42

Multiple Choice

The small-firm effect

• A)shows that investments in the stocks of small firms would have earned a below-normal return during the period beginning in the mid-1920s.
• B)may be the result of the low liquidity and high information costs of small-firm stock.
• C)was stronger during the 1980s than in previous decades.
• D)existed only during the 1970s and 1980s.

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Definitions:

Service Department

An organizational unit that provides support to the main production operations, often through maintenance, logistics, or administrative services.

Order Fulfillment Department

The division within a company that is responsible for processing customer orders and ensuring they are delivered to the correct address in a timely manner.

Variable Costs

Costs that change in proportion to the level of goods or services produced or sold.

Fixed Costs

Expenses that remain constant regardless of the level of production or sales activity, such as rent, salaries, and insurance premiums.