Advocates of the small-firm effect argue that it is this factor alone that leads to superior risk-adjusted returns. Does the Peavy and Goodman study support this position?
Answer to relevant QuestionsWhat does the weak form of the efficient market hypothesis suggest? What are the two major ways in which it has been tested? Suggest some studies that would indicate the market is not completely efficient in the semistrong form. What is the logic behind Barron’s Confidence Index? What does behavioral research indicate about the difference between men and women investors, on average? Why might the bond market be considered less efficient than the stock market?
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