QUESTION ODE a Technological changes have decreased the cost and increased the s

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QUESTION ODE a Technological changes have decreased the cost and increased the speed of information disseminatior in security markets, why might one suspect that firms following the "traditional" approach to inuestment management would find itincreasingly difficult to identify and acquire underpriced securities in this enuironment? (9 marks) b. You have the following aduice from two different aduisors Longtermasset allocation should be determined using an efficient Aduisor 1: frontier. Returns risks and correlations can be determined for each asset class from pistorical data. After calculating the efficient frontier for various locations, you shoul select the asset mix on the efficient frontier that best meets qour fund's risk tolerance Aduisor 2: "History gives no guide to the future. For exampleleverybody agrees that bond risk has increased above bistorical levels as a result of financial deregulation. A far better approach judgment about expected returns on the uarious asset classes based on current. You should rely on gour experience to determine the best asset mix and auoid bein,g influenced by computer printouts." to the long-term asset allocation is to use your best Aduisor 1 Rebuttal: "Current market conditions are not likely to persist into the future and are not appropriate for long-term asset allocation decisions. Moreover, your use of judgment and experience can be influenced by biases and emotions and is not as rigorous a method as my efficient frontier approach." Required Evaluate the strength and weaknesses of each of the two approaches presented above Recommend and justify an alternative process or asset allocation that draws from the strength of each approach and corrects their weaknesses (16 marks)

Explanation / Answer

Technological changes have decreased the cost and increased the speed of information dissemination in security market.

As the Technology is agile and keep on evolving day by day so, the impact of it may affect the security price. Technology has made possible the fastest means of the communication and data dissemination in all the fields. In order to know the price of the security then open your connection start surfing for it, you will have the value for your searched security.

As in the field of finance the information dissemination is very important and it cost in terms of some values. Due to the technology, the speedup of the process is there. Online processes are more clear and concise.

It is the matter of one’s suspect that firms following the traditional approach to invest management would find it increasingly difficult to identify and acquire under-priced security in this environment. This is so because the traditional approach is not automated one so humans are involved so there might be error in valuing the security manually. The traditional approach has evolved with the effect of technology. As in the growing world one is paying for the worth of the services of the technology with the security market investment prices so he/ she will be more concerned about the investment. Under-priced security has not generating much profit or wealth creation for the customer’s investment. There is less security in the world of technology but it is far more less in the traditional approach. The asymmetry of the information dissemination is there

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