Some investors would avoid investing in small capitalization stocks because:
A) Of the historically low risk premium.
B) Of their volatility.
C) They do not provide an adequate return.
D) Their historic return is about the same as the historic rate of inflation.
E) Investors prefer assets that are non-financial.

Question

Quizplus · Accepted Answer

Small capitalization stocks tend to be more volatile and carry higher risk compared to larger stocks. This may make some investors hesitant to invest in them as they may prefer a more stable investment with lower risk. However, it is worth noting that small cap stocks also have the potential for higher returns, which can be attractive to investors who are willing to take on more risk.

Some Investors Would Avoid Investing in Small Capitalization Stocks Because