<span>When artists pass away, the supply of their paintings most likely becomes collector's item or a memorabilia. These items are thought to be of high value or importance especially when the artist is associated to a specific event in the history. The items are sold at high prices or are kept in a museum.</span>
This approach is called <u>passive investment</u>
Passive investment refers to an investment strategy used by investors to increase their returns by selling and buying. Investors uses this investment strategy to prevent some fees and cut out limited performance that may likely accompany regular trading.
<h2>Further Explanation</h2>
Most investors used this strategy to have more returns which also help them to build wealth gradually. Passive investing is also called a buy and hold strategy. In passive investing, an investor buys security and hold to it for a longer-term.
Passive investors don’t look forward to profiting from short market fluctuation rather investors that used this strategy only have interest in the returns the markets bring in the long run.
Passive investors understand the market nitty-gritty, they also believe it is almost impossible to out-think the market, hence the reason they always to try to march market performance.
There are several benefits investors derived from using this investment strategy.
Some of these benefits include:
<u>Transparency:</u> investors do know the assets in an index fund
<u>Extreme low fees:</u> monitoring is not necessary simply because no one is picking stocks
<u>Tax efficiency:</u> this strategy does not lead to a yearly tax of massive capital gains since passive investors only buy and hold.
<u>Simplicity:</u> to own an index is very easy to implement and understand when compared to a dynamic strategy that involves regular adjustment and research.
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KEYWORDS:
- mutual fund
- passive investing
- vanguard index 500
- market
- index
Answer: See explanation
Explanation:
a. What is the market value of Locomotive Corporation before and after the repurchase announcement?
Equity value = Debt value / Debt to equity ratio
= 3,300,000/0.3
= 11,000,000
Market value = Debt value + Equity value
= $3,300,000 + $11,000,000
= $14,300,000
b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan?
To solve this, we need to know the interest payment first which will be:
= $3,300,000 × 9%
= $3,300,000 × 0.09
= $297000
Return on equity will now be:
= (EBIT - interest) / Equity
= (1320000 - 297000) / 11000000
= 9.30%
c. What is the expected return on the equity of an otherwise identical all-equity firm?
This will be:
= Earnings before Interest / Unlevered firm value
= 1320000 / 14300000
= 9.23%
d. What is the expected return on the firm’s equity after the announcement of the stock repurchase plan?
This will be:
= 9.23% + 50% × (9.23% - 9%)
= 9.35%
Answer:
C. It states what your paper will prove
Explanation:
Sorry if it wrong
Answer:
y in terms of x would be:
y = 100 - 10,000 / (100 +x)
Explanation:
Let us assume the investment amount is 100
And let x is equal to 25 and y is equal to 20
So, there is increase in January
= 100 + 25% × 100
= 100 + 25
= 125
In order to decrease, it is to be back down to 100 in February, y =20
= 125 - 20% × 125
= 125 - 25
= 100
Therefore, in order to check that the value of y is correct or not, which we assumed. We will plug
x = 25 into the equations:
= 100 - 10,000 / (100 + x)
= 100 - 10,000 / (100 + 25)
= 100 - 10,000 / 125
= 100 -80
= 20
Therefore, this equation is right.
Note: Options are not given so providing the direct answer.
