Consider the Following Average Annual Returns

question 24

Multiple Choice

Consider the following average annual returns:

What is the excess return for the portfolio of small stocks?

• A) 11.7%
• B) 16.6%
• C) 19.5%
• D) 17.6%

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Definitions:

High Quality

Reflecting a high level of excellence or superior standard in terms of durability, performance, or accuracy.

Low Quality

Describes products or services that do not meet the standard performance expectations or durability.

Equilibrium

A state in a market system where supply equals demand, and no economic forces are acting to change the price or quantity.

Lemons

Beyond its botanical context, refers to goods of subpar quality, particularly used in the context of the used-car market to describe vehicles with defects.