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:

Formed Elements

Cellular components of blood, including red blood cells, white blood cells, and platelets, that are suspended in plasma.

Plasma

The liquid component of blood, in which blood cells are suspended, comprising about 55% of total blood volume.

Clumping Together

The process by which particles or objects gather or aggregate into a mass or group.

Blood Cells

Cells that circulate in the blood, integral for transporting oxygen, fighting infections, and performing other vital functions; include red blood cells, white blood cells, and platelets.