Following the investor model presented in this chapter, what returns do noise traders make on their investments in the long term: negative returns, returns around zero, or positive returns? What returns do fundamental investors make?
Answer to relevant QuestionsWhy do noise traders have limited impact on a company’s share price even when they make the largest volume of trades in the company’s stock over a given time period? Explain why the value of a business may differ under different owners. What are the benefits to society when a business is owned by its best owner? Describe the five acquisition archetypes that often create value for both the acquirer and the seller. Based on situations with which you are familiar, rank these archetypal strategies from easiest to hardest to plan and ...An executive is reluctant to sell a high-performing business unit, arguing that the sale would dilute the company’s ROIC to a level below the WACC and make the company value-destroying. Discuss.
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