FINA 411 Study Guide - Nyse American, Efficient-Market Hypothesis, Dfa Records
Document Summary
Dimensional fund advisory was an investment firm composed of small stocks. This firm believed in the efficient market theory. They believed in diversification to reduce firm specific risk, but they did not rely on indexing or passive investment. They believed in the small stock effect : small stocks provide greater returns than large stocks for the same amount of volatility. Their strategy was to invest in small cap stocks based on deciles. They started with the dfa 9-10 strategy , in which they invested in companies chosen from the 9th and 10th deciles of the. Nyse, the american stock exchange and the nasdaq. Dfa 6-10 strategy and the dfa 6-7-8 strategy . The implemented an active strategy by searching for attractive purchases. They rejected stocks that were expected to divulge news soon. They questioned themselves about the seller and the nature of the sells.
