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Essay Available:
Pages:
1 page/β‰ˆ275 words
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2 Sources
Style:
APA
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
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Topic:

Small Stocks and Value Stocks

Essay Instructions:

Include some news that is less than a year old that is applicable to this discussion. 
Part 1: There is evidence that small stocks and value stocks perform better over the long term than the market averages. What are some logical reasons for this phenomenon? 
In answering Part 1, discuss small - value stocks. Then compare small - value stocks to large cap stocks. Discuss why small - value stocks outperform large cap stocks.
Part 2: There is strong evidence that many investors suffer from familiarity bias and overconfidence bias. Can you explain why these biases might exist? Can you think of a situation in which you might make these mistakes (if you hadn’t learned about these biases in this module)? 
In answering Part 2, discuss behavioral finance. Discuss why investors act sometimes irrationally.

Essay Sample Content Preview:

Small stocks and Value stocks
Name
Institution
Small stocks and Value stocks
Part one
Value stocks are securities that are sold at a lower price than their actual market price. This stocks have a low current price to earnings ratio and the investor purchases this stock in the hope that the market will realize their value and their price will increase. They believe if the stock increase in value they will gain more profits than if they invested in higher- price stock.
Small stock are stocks of small companies while large cap stocks are stocks of large companies. Small cap stocks are said to be a good investment since they have low valuation and high growth potential. Small cap stock are more profitable since they involve more risk unlike large cap stock. (Klein, 1993)
Companies that trade in small cap stock tend to perform better than those large cap companies because they are more volatile and have a failure rate. From a recent blog ...
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