The Small-Firm Effect May Constitute Evidence Against Market Efficiency

question 16

True/False

The small-firm effect may constitute evidence against market efficiency.

---

Definitions:

Outlay

An amount of money spent on something, often as an investment or expenditure.

Cost of Capital

The rate of return that a company must pay on its investments to satisfy its investors or creditors.

Cash Flows

The movement of money into and out of a business, representing earnings and expenditures.

Internal Rate

Often referring to the Internal Rate of Return (IRR), it's the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.