Asked by Heather Marie on Jun 07, 2024
Verified
Stocks of small companies have higher average returns than those of larger companies.
Small Companies
Businesses with relatively small market capitalization or revenues.
Average Returns
Refers to the mean financial return of an investment over a specified period, which includes dividends, interest, and capital gains.
- Learn about the performance characteristics of small vs. large company stocks.
Verified Answer
CM
Carmen MejiaJun 11, 2024
Final Answer :
True
Explanation :
Historically, stocks of small companies have shown higher average returns than those of larger companies, a phenomenon often attributed to the higher risk associated with smaller firms, which investors expect to be compensated for with higher returns. This is known as the size premium.
Learning Objectives
- Learn about the performance characteristics of small vs. large company stocks.
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