Step 7 Invest in Small-Company Stocks

What is a small-company stock?

• A stock from a company too small to be in the S&P 500 Index with a market cap of $3 billion or less

• A stock from a company in the S&P 500 Index

• A stock from a company with a market capitalization over $15 billion

• A stock from a company like Microsoft or Apple

What is the potential benefit of investing in small-company stocks?

• They have the potential to double, triple, and quadruple in size

• They are less risky than large-company stocks

• They are guaranteed to succeed

• They are household names

Which of the following companies is NOT mentioned as a holding in Vanguard’s Small Cap Index Fund?

• Microsoft

• Exact Sciences

• IDEX

• Atmos Energy

What was the compound annual return of U.S. small-company stocks from 1928 through 2019?

• 12%

• 9.9%

• 11%

• 13.8%

How much would a $10,000 investment grow to over a 40-year period at a 12% return?

• $930,510

• $436,423

• $650,009

• $1,760,721

What is the average market capitalization of small-company stocks as used in the book's statistics?

• $1.6 billion

• $3 billion

• $15 billion

• $10 billion

What is the main point about small-company stocks in the passage?

• They have a record of producing higher returns over long periods

• They are less volatile than large-company stocks

• They are guaranteed to outperform the S&P 500 every year

• They are only suitable for young investors