Asked by
Grace Oguama
on Oct 20, 2024
Verified
The effect of liquidity on stock returns might be related to:
I. The small-firm effect
II The book-to-market effect
III The neglected-firm effect
IV. The P/E effect
A) I and II only
B) I and III only
C) II and IV only
D) I, II, and III only
Liquidity
The ease with which an asset can be quickly bought or sold in the market without affecting its price.
Small-Firm Effect
The observed phenomenon that, on average, smaller firms have historically provided higher risk-adjusted returns than larger firms.
Book-To-Market Effect
The tendency for securities with high book-to-market ratios to outperform those with low ratios.
- Gain an understanding of how financial metrics, including P/E ratios, relate to the performance of stock investments.
- Understand the temporal and repeating trends in equity returns and what they entail.
Verified Answer
BM
Learning Objectives
- Gain an understanding of how financial metrics, including P/E ratios, relate to the performance of stock investments.
- Understand the temporal and repeating trends in equity returns and what they entail.