Small stock risk premium no myth; size does matter

Business Valuation UpdateVol. 7 No. 9
September 2001
Shannon P. Pratt, CFA, ARM, ABAR, FASA, MCBA, CM&AA
discount rate, cost of equity, size effect, small stock premium


Until about a year ago, I thought that, on average, the fact that small stocks are riskier than large stocks had been firmly established in the financial community, and that attacks on the "small stoc ...