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6 6 Which of the following statements is(are) correct? Choose all correct answers. We can add a small company premium to the cost of equity
6 6 Which of the following statements is(are) correct? Choose all correct answers. We can add a small company premium to the cost of equity estimated from the CAPM; in addition, the small company premium can be estimated without any uncertainty (like the market risk premium). We can add a small company premium to the cost of equity estimated from the CAPM; however, adding this premium introduces more noise because the small company premium is estimated with uncertainty. Small stocks (those with lower market capitalization) tend to have higher average returns than big stocks Big stocks tend to have higher average returns than small stocks
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