Which of the Following Statements About Investment Style Is FALSE

question 52

Multiple Choice

Which of the following statements about investment style is FALSE?

• A) Growth stocks generally have smaller capitalizations than value stocks.
• B) Value stocks have P/E and P/B ratios significantly lower than those of growth stocks.
• C) Value stocks dividend yields are much higher than those of growth stocks.
• D) Growth and levels of earnings is higher in growth stocks.
• E) Value stocks have a higher risk premium.

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Definitions:

Fixed

Relates to assets or costs that do not change with the level of production or business activity in the short term.

Linear

A term describing something arranged in or extending along a straight or nearly straight line.

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that give a consumer equal satisfaction and utility.

Convex

A shape or curve that bulges outward or is thicker in the middle than at the edges, often used in economic models to describe certain types of preference or utility functions.