- CFA Exams
- CFA Level I Exam
- Study Session 17. Portfolio Management (2)
- Reading 46. Economics and Investment Markets
- Subject 5. Equities and the Equity Risk Premium
CFA Practice Question
When the economy is expanding, ______ stocks tend to underperform ______ stocks.
A. growth, value
B. large, small
C. non-cyclical, cyclical
Explanation: Small stocks fluctuate more than large stocks. If the economy is expanding, small stocks tend to do better than large stocks.
User Contributed Comments 2
User | Comment |
---|---|
janis36 | "Non-cyclical stocks tend to underperform cyclical stocks" is also correct. When the cycle is in the upswing so are cyclical stocks. |
negimofa | I think A is less correct here as stocks can be cyclical to various factors depending on the industry they operate in |