Studies of the Small-Firm Effect Indicate That There May Be

question 75

Multiple Choice

Studies of the small-firm effect indicate that there may be superior return potential in investing in smaller-capitalization firms, because:

• A)the high P/E ratios of many of these firms eventually lead to superior returns.
• B)smaller firms have fewer expenses, therefore, making more money for their investors.
• C)there is less efficiency in this segment of the market, due to minimal institutional participation.
• D)smaller firms are always growing, along with the returns that their investors receive.

---

Definitions:

Negative Reinforcers

An aversive stimulus whose removal following a behavior increases the likelihood of that behavior being repeated.

Conditioned Stimulus

An initially neutral signal that, once it has been linked with an unconditioned stimulus, ultimately leads to eliciting a conditioned reaction.

Unconditioned Stimulus

In behavioral psychology, an event that naturally and automatically triggers a response without prior learning.

Extinction

In conditioning, the process through which a previously reinforced behavior is weakened by the absence of reinforcement.