Answer true or false to the following questions:

a. Low price-earnings stocks, on average, earn returns in excess of expectations, while high price-earnings stocks earn less than expected.

This is primarily because lower PE ratio stocks have lower risk.

True ____ False ____

b. The small firm effect, which refers the positive excess returns earned, on average, by small firms, is primarily caused by a few small firms that make very high positive returns.

True ____ False ____

c. Investors generally cannot make money on analyst recommendations, because stock prices are not affected by these recommendations.

True ____ False ____