Application of small CAP

This contribution deals with the essence of the small cap premium in terms of current literature focused on this topic. It can be stated that this topic has recently gained in popularity with many authors; however, the essence of the premiums is still not entirely clear. The first studies mentioning this issue point especially to the CAPM, mainly because of the fact that the small cap premium arose from the attempt to adjust the CAPM used for the business valuation for its empirical limitations. Small cap premium reflects the fact that companies with small capitalization often beat their larger competitors.