You Have Just Completed a Study of Small and Large

question 45

Essay

You have just completed a study of small and large stocks and have obtained the following results:
s $\begin{array} { l c c } & \text { small stocks } & \text { large stocks } \\\text { excess returns } & 5 \% & 0 \% \\\text { transactions cost } & 10 \% & 2 \%\end{array}$

Given the difference in transactions costs,how long would your investment horizon have to be for small stocks to be a better investment than large stocks?

---

Definitions:

Population Mean

The average value of a property in the population, representing a parameter that is typically unknown and estimated from a sample.

Nonnormal

Describing data or distributions that do not follow a normal (Gaussian) distribution pattern, which may affect statistical analysis and interpretations.

Single Mothers

Women who are raising their child or children without the involvement of the children's father, due to various circumstances.

Required Condition

A necessary criterion or condition that must be met for a procedure to be carried out or for a statement to be considered true.