Question

Historically, small stocks have __________ average returns than large stocks.

a) Higher
b) Lower

Answer 1

Small stocks have lower average returns than large stocks.

Step-by-step explanation:

Historically, small stocks have lower average returns than large stocks. This is because small stocks tend to be riskier, and investors require a higher return to compensate for that risk. Large stocks, on the other hand, are generally considered more stable and less risky, so their average returns are typically lower.