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Given a piece of fine artwork and a share of Microsoft stock, which would you expect to have a higher financial return? Why?

Economics Dec 09, 2020

Given a piece of fine artwork and a share of Microsoft stock, which would you expect to have a higher financial return? Why?

Expert Solution

Answer) Before moving on to answer ,one thing which we need to be clear is that we are talking from perspective of financial return and not the current value of artwork or stock,when we talk about fine artwork,its value is very high but in terms of return,it may not come close to microsoft stock,for example microsoft stock is currently trading at $215 per stock which is 7 times more or there is 600% return from the start of this century,return is much more from start,for a fine artwork,this kind of return is rarely possible but what is more interesting is that in coming years we may see a bigger return in 20 years,this is not the case with artwork,reason is because Microsoft is expected to grow in value with its growth in different areas,we cannot expect same for artwork,we have looked at past performances,we have looked at future potential owing to value generation,third way to look at it is through lense of importance of company and artwork for world in future,as company becomes more and more integrated in our lives,its value will grow and so will the value of our financial return.So,based on these reasons,I would expect stock to give more financial return.

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