Which of the following is not an advantage of using an internal management approach for the...

Which of the following is not an advantage of using an internal management approach for the firm’s short-term investment portfolio? Select one: a. Less fraud b. Increased likelihood of incentive alignment c. Control d. Guaranteed expertise

Expert Solution

Solution:

The correct answer to the given question would be an Option d

Reason/Explanation:

The short term investment viewpoint mainly benefits the company in the following way:

a) As the investment horizon is for a shorter period of time, it is easier for the company to track the growth or the improvement of the investment accurately, thus, it lessens the chances of fraud. Thus, we discard the first option.

b) The management approach of short term investment planning helps in aligning the incentive opportunities. So, we discard the second option as well.

c) As the investment is done for a shorter period of time, the firm, easily, can monitor and control such investment. Therefore, we discard the third option as well.

d) The managerial approach of going for the short term investment doesn't guarantee or ensure the optimum usage of the funds or the expertise. Thus, the last option is not an advantage of the short term investment portfolio.

Hence, from the above discussion, we conclude that the correct answer to the given question is the last option.

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keosha answered 1 year ago

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