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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Definitions:

Emotional Responses

Reactions that are subjectively experienced as feelings and can be triggered by thoughts, environmental stimuli, or physiological changes.

Latent Learning

Latent Learning refers to knowledge acquired without immediate expression or reinforcement, becoming apparent when a situation calls for it.

Subliminal Awareness

The process by which individuals can respond to stimuli that are below the threshold of conscious perception.

Preparedness

The state of being ready for something, especially in the context of psychological or physical challenges.