Question: Suppose, during a given year, the return on an equal-weighted portfolio consisting of the 500 stocks in the S&P 500 is higher than the actual

Suppose, during a given year, the return on an equal-weighted portfolio consisting of the 500 stocks in the S&P 500 is higher than the actual return on the S&P 500 (which is value-weighted). This means that, during the year, on average the returns of larger stocks are generally_________ the return of smaller stocks.

A) higher than

B) lower than

C) equal to

D) more volatile than

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

2. A stock's beta equals. The market return is expected to be 8 percent. The risk-free rate equals 3%. What is the expected return on the stock based on the CAPM? A. 5 percent B. 8 percent C. 10...

27) A stock's beta equals 2. The market return is expected to be 8 percent. The risk-free rate equals 3%. What is the expected return on the stock based on the CAPM? A. 5 percent B. 8 percent C. 10...

3. Suppose, during a given year, the return on an equal-weighted portfolio consisting of the 500 stocks in the S&P 500 is lower than the actual return on the S&P 500 (which is value-weighted). This...

Suppose, during a given year, the return on an equal-weighted portfolio consisting of the 500 stocks in the S&P 500 is lower than the actual return on the S&P 500 (which is value-weighted). This...

28) Suppose, during a given year, the return on an equal-weighted portfolio consisting of the 500 stocks in the S&P 500 is lower than the actual return on the S&P 500 (which is value-weighted). This...

Backtesting In Lecture 5, we saw that the risk parity strategy would have performed very favorably in allocating funds across major asset classes, including bonds, stocks and commodities over the...

1. Using Probability Distributions. Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the historical record, use the NORMDIST function in Excel to answer...

Using Probability Distributions. Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the historical record, use the NORMDIST function in Excel to answer...

For example, the continuous probability distributions of rates of return on stocks for two different companies are shown on the following graph Company A NOW Company f RATE OF RETURN Mac! 7....

i Data Table - X Stock Beta Expected Return 1 2 3 4 5 Percentage of Portfolio 20% 30% 15% 25% 10% 1.00 0.85 1.20 0.60 1.60 16% 14% 20% 12% 24% Print Done (Estimating betas) Consider the following...

A building acquired at the beginning of the year at a cost of $820,000 has an estimated residual value of $100,000 and an estimated useful life of 50 years. Determine (a) The double-declining-balance...

Kashi is a delivery truck driver in Winnipeg when he is involved in an automobile accident due to inclement weather. Kashi is covered by his short-term disability (STD) policy he took out in 2013....

Since the estimates of alpha in a single - factor index regression are generated Blank _ _ _ _ _ _ , they do not mean that anyone could have forecast them Blank _ _ _ _ _ _ to outperform the market...

Lightfoot Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative preferred 2% stock, $20 par, and 31,000 shares of $125 par common. During its first four...

=+ e. Using your graph, show the impact of an increase in u. (Hint: This change affects both curves.) Describe both the immediate and the steady-state effects.

=+ 7. Choose two countries that interest youone rich and one poor. What is the income per person in each country? Find some data on country characteristics that might help explain the difference in...

=+difference? In your judgment, how useful is the Solow model as an analytic tool for understanding the difference between the two countries you chose?