Questions for Case at the Dimensional Fund Advisors (The Size Effect Study

Questions for at the Dimensional Fund Advisors (The Size Effect and The Value Effect) - Case Study ExampleDFAs business practices of trying of avoid the lemons riddle while not doing any fundamental analysis suggest that they believe strong form of commercialise efficiency merely worried that semi-strong form of market efficiency might fail (Cohen 4). These sentiments can be illustrated by the dedication to the principle of market efficiency where over any given time pen no investor has the ability to pick stocks that would beat the market in its performance. Its main concern was the presence of negative private information known to the seller but not to the market.According to Cohen, the Fama-French -three factor type of efficient market brings into consideration three products size, value, and market risk factor in the capital asset price model (13). With the deterioration of the small stocks in the 1980s and 1990s, these small stocks managed to outperform small stock indexes a nd small cap funds due to purchase discounts which were unite with the avoidance of adverse selection.It is true to say that due to the size effect, smaller stocks tend to do better than large stocks as in the case of LinkedIn and Google where the causation has higher returns than the latter. Conversely, according to the value effect, since Google has a higher book to market ratio as compared to LinkedIn, this means that in this case, Google gunners more returns (Cohen 19).In consistence to the system that market price is efficient, we can conclude that small firms and value firms on average have high returns. However, investors are not crazily excited to the highest degree the small and value investment products that DFA recently offered, which exactly focus on earning the high returns of small and value