The Small-Firm Effect

question 34

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) is the tendency for stocks of large firms to outperform those of small firms.

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