The January effect refers to:

Question

Quizplus · Accepted Answer

The January effect is the phenomenon where the average share return for January is larger than in any other month. This effect may be due to investors buying assets in January after selling their losing assets in December to lower their tax bill, or due to a general increase in optimism at the start of a new year. Option A is incorrect as the reverse is true - the average share return for January is larger than any other month. Option B does not make sense as it is not related to finance principles. Option D is incorrect as the January effect is specific to the month of January and not related to firm size.

The January Effect Refers To