If an Analyst Were Analyzing a Small Company,a Small Stock

question 22

True/False

If an analyst were analyzing a small company,a small stock equity risk premium would be more appropriate than using a large-stock equity risk premium.

---

Definitions:

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Wage Compression

A situation where there is a diminishing difference in pay between employees regardless of their skills, experience, or job responsibilities.

Pay Structure

The organization of different salary levels and scales that reflects the hierarchy of positions, responsibilities, and salaries within a company.

CPI

The Consumer Price Index is a calculation that determines the overall average cost of a selected collection of consumer goods and services, including categories like food, transportation, and healthcare.