Assume That You Are Embarking on a Test of the Small-Firm

question 5

Multiple Choice

Assume that you are embarking on a test of the small-firm effect using APT.You form 10 size-based portfolios.The following finding would suggest there is evidence supporting APT:

• A) The top five size based portfolios should have excess returns that exceed the bottom five size based portfolios.
• B) The bottom five size based portfolios should have excess returns that exceed the top five size based portfolios.
• C) The ten portfolios must have excess returns not significantly different from zero.
• D) The ten portfolios must have excess returns significantly different from zero.
• E) None of the above.

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Definitions:

Status Frustration

A psychological condition resulting from an individual's inability to achieve his or her expected social status, leading to feelings of inadequacy and disappointment.

Delinquent Subcultures

Groups within society that engage in behavior against the societal norms and laws, often among youths.

Differential Illegitimate Opportunity

A theory suggesting that access to opportunities for achieving success through illegal means varies among different social groups.

Means-Goal Gap

The discrepancy between individuals' goals and the legitimate means available to them to achieve those goals, often discussed in the context of strain theory in sociology.