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Just like gamblers place bets on boxers who fight in divisions based on their weight, investors, too, put their money down on stocks that are grouped together by size. All publicly traded companies...
Small Cap vs. Large Cap: Some investors use the size of a company as the basis for investing. Studies of stock returns going back to 1925 [ citation needed ] have suggested that "smaller is better," and on average, the highest returns have come from stocks with the lowest market capitalization , the so-called " Size premium ".
Large-cap stocks are generally considered to be safer investments than their mid- and small-cap stock counterparts because they are larger, more established companies with a proven track record.
Asset classes and asset class categories are often mixed together. In other words, describing large-cap stocks or short-term bonds as asset classes is incorrect. These investment vehicles are asset class categories, and are used for diversification purposes. Multiple asset classes mixed together in a fund structure can provide an investor with ...
Up to a certain point, the use of debt (such as bonds or bank loans) in a company's capital structure is beneficial. When debt is a portion of a firm's capital structure, it permits the company to achieve greater earnings per share than would be possible by issuing equity.
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The Russell 2000 is by far the most common benchmark for mutual funds that identify themselves as "small-cap", while the S&P 500 index is used primarily for large capitalization stocks. It is the most widely quoted measure of the overall performance of small-cap to mid-cap company shares.
Compared to a longer-term bond, a short-term bond will typically offer a lower interest rate when all other factors are equal. Short-term vs. long-term bonds: Key differences