In Order to Reach Goals of High Dollar Returns on Your

question 56

Multiple Choice

In order to reach goals of high dollar returns on your investments, what must you generally give up?

• A) risk
• B) safety
• C) diversification
• D) speculation

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Definitions:

Neglected-firm Effect

A theory suggesting that lesser-known, smaller companies can provide higher returns than their larger counterparts due to lack of analyst coverage.

Excess Returns

Returns on an investment that exceed a benchmark or average return, indicating higher-than-expected performance.

Abnormal Returns

Returns on a security or portfolio that exceed what is predicted by market models, such as the CAPM, indicating outperformance.

Hyman Minsky

An American economist known for his theories on financial instability and the inherent tendency of financial markets to move towards crisis.