Asked by Anisha Bagga on Jul 13, 2024
Verified
Which of the following is not a concept related to explaining abnormal excess stock returns?
A) January effect
B) neglected-firm effect
C) P/E effect
D) preferred stock effect
Neglected-firm Effect
A phenomenon where lesser-known, smaller companies may outperform larger companies because they receive less attention from analysts.
January Effect
A seasonal increase in stock market prices that typically occurs during the month of January, often attributed to the buying of stocks that were sold at the end of the previous year for tax purposes.
P/E Effect
The P/E effect is a market anomaly observed where stocks with lower Price-to-Earnings (P/E) ratios tend to outperform those with higher P/E ratios over time.
- Identify and explain various anomalies and effects that challenge the EMH, such as the January effect, momentum effect, and liquidity effect.
Verified Answer
Learning Objectives
- Identify and explain various anomalies and effects that challenge the EMH, such as the January effect, momentum effect, and liquidity effect.
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