Banz (1981)has Evidenced a Trading Strategy in the USA That

question 40

Multiple Choice

Banz (1981) has evidenced a trading strategy in the USA that can earn risk-adjusted profits of around 20% by taking:

• A) long positions in a portfolio of large firms and short positions in a portfolio of small firms
• B) short positions in a portfolio of large firms and long positions in a portfolio of small firms
• C) short positions in a portfolio of small firms and long positions in a portfolio of large firms
• D) long positions in a portfolio of small firms and short positions in a portfolio of large firms

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Definitions:

Auditor Liability

Legal responsibility borne by auditors due to negligence or other failures in their auditing activities.

Restatement Rule

A principle in common law jurisdictions where courts follow authoritative summaries of the common law, often used for clarity and consistency in legal principles.

Third Parties

Individuals or entities that are not directly involved in a contract or legal agreement but may be affected by its outcome.

Ultramares Rule

A legal doctrine determining the liability of accountants for negligence to third parties who rely on their financial reports.