Is the Risk-Return Tradeoff Hypothesis valid: Should an Investor hold Growth Stocks rather than Value Stocks?

摘要: This paper will examine if smaller companies outperform large ones in the backwashes of crisis, i.e. growth stocks are better off than value when investing. I investigate how well three largest from Nasdaq OMX’s small cap, mid cap and managed to perform compared market index OMXSPI. Using Capital Asset Pricing Model use beta as a measure risk see higher entails returns, risk-return tradeoff model assumes. Three portfolios consisting each be observed compared. The samples be: i) portfolio at OMX list, ii) list iii) an comparing index: divided into two different groups: one where equally weighted by its capitalization, there any significantly differences. Each also appropriate index. result supports assumption tradeoff: risk, return. Given that investor is willing bear more return on investment made higher. According research found do larger ones, since had lowest rate for given time period. But not totally true: did manage hence best performance after crisis was portfolio. therefore conclude partly true, mix growthand would generate highest data need used give exact result.