The empirical evidence suggests that

Question

Quizplus · Accepted Answer

The empirical evidence shows that small stocks tend to outperform large stocks when their relative market risks are considered. This is known as the size premium, which is a well-documented anomaly in finance. The other statements (A and C) are not true. Growth stocks do not necessarily outperform value stocks when risk is considered, and the CAPM is not a reliable predictor of returns. The empirical evidence shows that small stocks tend to outperform large stocks when their relative market risks are considered. A and C are not supported by empirical evidence.

The Empirical Evidence Suggests That