Any value stock tends to outperform growth stock

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Reference no: EM132032568

1. Do size and value effects mean that any small stock tends to outperform large stock and that any value stock tends to outperform growth stock? What should be the right way to describe these effects?

2. Google is a big stock and LinkedIN is a small stock, but at the same time Google has a higher book-to-market ratio than LindedIN. According to the size effect, Google should have lower return than LinkedIN because its size is bigger; but according to the value effect, Google should have higher return than LinkedIN because its book to market ratio is higher. Is the above statement correct? Why?

Reference no: EM132032568

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