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Recall that trading by arbitrageurs (smart investors) tend to make prices better reflect fundamental value. We know that institutional investors (funds) tend to trade stocks
Recall that trading by arbitrageurs (smart investors) tend to make prices better reflect fundamental value. We know that institutional investors (funds) tend to trade stocks with large market capitalization because those stocks are more liquid (easier to trade). Does this imply that the prices of large capitalization stocks tend to be more efficient?
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