Closing Case 13

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Closing Case: Chapter 13 Bonnie Jordan Managerial Finance Instructor: Kristi Rayford March 11, 2013 The Closing Case in Chapter 13 focuses on options for a 401K for an employee of the East Coast Yacht Company. Several decisions must be made regarding investments, which will be highlighted in this discussion. Equity investments can go into the S & P 500 or an index related option. The former has lower fees, and the latter higher ones. Other elements to be discussed include the aforementioned investment options, graph implications regarding mutual fund investors, market efficiency, and an equity investment decision to be made by the East Coast Yacht employee. The East Coast Yacht company’s finance representative, Dan…show more content…
With the equity portion of my 401(k) account, equity decisions would be made to favor large cap stocks as they have more opportunities to increase in value, even though they can be “pricey”. As Moreano (2013) states, “The Dow Jones Industrial Average is on track to close positive for the 10th consecutive Friday. So far this year, the Dow industrial average rose 600 points in the last 10 Fridays. That accounts for about ha lf of this year’s point gains – the index is up 1,274 points. Since the first half of 2007, this will be the longest streak when 12 consecutive Friday set the record. Continuing, Moreano (2013) posits “Within the Dow, seven out of thirty stocks are responsible for adding more than 50 percent of this year’s point gains: International Business Machines, 3M, McDonald’s, United Technologies, Chevron, Travelers, and Home Depot”. In conclusion, the Closing Case in Chapter 13 focuses on options for a 401K for an employee of the East Coast Yacht Company. Several decisions were made regarding investments, which were be highlighted in this discussion. Equity investments can go into the S & P 500 or an index related option. The former has lower fees, and the latter higher ones. Other elements discussed include the aforementioned investment options, graph implications regarding mutual fund investors, market efficiency, and an equity investment
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