Compared to the Stocks of Larger Firms, the Stocks of Smaller

question 41

Multiple Choice

Compared to the stocks of larger firms, the stocks of smaller firms are

• A) less volatile.
• B) more volatile.
• C) more liquid.
• D) safer.

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Definitions:

Reward To Risk Ratio

A metric used by investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Risk Premium

The additional return expected by an investor for taking a higher risk.

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by government bonds.

Recessionary Economy

An economic condition characterized by a significant decline in general economic activity over a sustained period.