is passive stock investing the superior approach?

Q: What is the break-even stock price for the protective put?

A: A protective put is when an investor has bought (long) the underlying asset and at the same time…

Q: Why are investors attracted to preferred stocks andcommon stocks?

A: There are two types of stock. These are equity stock and preferred stock. Preferred stock is the…

Q: What are defensive stocks and What is an efficient set of securities? Is it true that a market…

A: aCCORDING TO THE RULE, BECAUSE YOU HAVE POSTED MULTIPLE QUESTIONS, WE WILL ANSWER THE FIRST QUESTION…

Q: How might the incentive fee of a hedge fund affect the manager’s proclivity to take on high-risk…

A: Under portfolio fund, manager earns management fee and incentive fee. Manager incentive fee is also…

Q: What is the major reason for a forward stock split?

A: Stock Split: Stock Split is a scheme in which a company’s total number of shares outstanding will…

Q: Should managers focus directly on the stock’s actual market price or its intrinsic value, or are…

A: The market price (MP) is the current price at which they can purchase or offer a resource or asset…

Q: Would an investor concerned about market volatility be happier investing in large cap or small cap…

A: Market volatility is a standard to measure the rate of return of money or investment. Market…

Q: Can the goal of maximizing the value of the stock conflict with other goals, such as avoiding…

A: In corporation the maximize the value of shareholders wealth is basic objectives of management of…

Q: Why do some investors prefer high-dividend-paying stocks?

A: The dividend is the returns provided to the shareholders of the company. The dividend is the income…

Q: What is the difference between inside view and outside view in investing? Give a scenario where they…

A: Inside View in investing comes from the individual own experience of investing and they actively…

Q: Is it reasonable to ignore IDIOSYNCRATIC RISK and care only about MARKET (SYSTEMIC) risk? What about…

A: Definitions  Idiosyncratic risk : In simple words, idiosyncratic risk can be understood as the risk…

Q: What happens if someone is not given the Beta for a stock that they are analyzing? Will they still…

A: CAPM described the relationship between systematic risk and expected rate of return. The equation is…

Q: What is the primary motivation for a forward stock split?

A: Here is the Answer

Q: According to your analysis, stock ABC is overvalued. What is the best course of action?

A: Stock Overvalued: A stock is said to be overvalued when its current market price is greater than…

Q: Which of the investors are known for taking the higher investment risk? O Common Stock holders Bond…

A: Investment risk is the risk that the amount invested is likely to decline in value or not give as…

Q: When would individual equity securities be a better choice over ETFs for a risk adverse investor?…

A: There are various alternatives available for investment. Equity security and ETFs are also an…

Q: Why is noncumulative preferred stock often considered anunattractive form of investment?

A: The expression "noncumulative" depicts a kind of preferred stock that doesn't pay investors any…

Q: Taking the Efficient Market Hypothesis into consideration, do you think we still need to study…

A: The efficient market hypothesis (EMH) explains the performance of the stock market as a reflection…

Q: now about common stock valuation if there is already an efficient market

A: Efficient market theory is theoretical concepts only and use in academics only.

Q: Why is beta the theoretically correct measure of a stock’s risk?

A: Introduction: Risk refers to the degree of volatility involved in the anticipated return on…

Q: What are the advantages and disadvantages of investing in the stock market vs the bond market?

A: Investing in the stock market is purchasing corporate shares and gaining control of the firm.…

Q: How can an investor eliminate Unsystematic Risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk. Systematic risk is non…

Q: Given that higher-risk investments, such as small-company stocks, have outperformed other…

A: It is first important to understand the objective of investment in different asset classes and…

Q: Do you think we still need to study common stock valuation, given the Efficient Market Hypothesis?…

A: Efficient Market Hypothesis represents the stock prices after considering all the information…

Q: Why might other investors prefer low-dividend-paying stocks?

A: Investors determine the dividend as part of the stock value of a stock when stock offers a dividend.

Q: How can an investor eliminate Systematic risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk

Q: In your opinion, what is the most important reason for a forward stock split?

A: This question explains about the most important reason for a forward stock split

Q: What is the difference between conservative, risky, balanced, adventurous, and speculative investor?

A: An investor is an individual, company, or any institution that block it's capital in expectations of…

Q: Why do call options with exercise prices greater than the price of the underlying stock sell for…

A: To understand this statement, we consider a practical example Let stock have current price…

Q: What is the difference between a diversifiable riskand a nondiversifiable risk? Should stock…

A: The diversifiable risk or unsystematic risk: It may be a kind of risk particular to a given economy,…

Q: What are some benefits of owning stocks? How can you mitigate the risk?

A: Owning stocks brings with itself its own unique set of risks and benefits.

Q: Describe how adding a risk-free security to modern portfolio theory allows investors to do better…

A: A group of investment portfolios that are projected to produce the maximum returns at a given degree…

Q: What are the implications of the efficient market hypothesis for investors who buy and sell stocks…

A: The efficient market hypothesis or efficient market hypothesis is also known as the random walk…

Q: Why is it reasonable to ignore diversifiable risk and care only about nondiversififiable risk? What…

A: Diversifiable risk is that risk that can be easily diversified by making the investment into…

Q: Is it possible that the market for individual stocks could be highly efficient, but themarket for…

A: It is possible that the market for individual stock could be highly efficient, but the market for…

Q: Why are investors risk-averse? How can investors deal with different degrees of risk?

A: In the world of investment, the risk is price volatility. A volatile investment may either make you…

Q: What are the conditions for stock market efficiency? Is it possible that market for individual…

A: Stock prices completely reflect available information in an effective capital market: Rationality,…

Q: What are defensive stocks?

A: According to the rule, because you have posted multiple questions, we will answer the first…

Q: A stock's beta is more relevant as a measure of risk to an investor who holds only one stock than to…

A: Beta represents the systematic risk and it shows the relationship of the stock with the market.