Sylvia Booma Has Just Learned That There Are Two Different

question 32

Essay

Sylvia Booma has just learned that there are two different ways of investing in the equity market; namely, equity mutual funds and SPVL. She doesn't understand the difference between the two, however. Can you help?

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Definitions:

Long-Term Investment

Investments in securities or assets intended to be held for several years or more to generate long-term returns.

Cash Surrender Value

Cash surrender value is the amount of cash that a life insurance policyholder can receive upon the cancellation of their policy before its maturity or the insured event.

Capital Lease

A lease agreement considered to have the economic characteristics of asset ownership, thus it is recorded as an asset and liability on the balance sheet.

Fair Market Value

An estimate of the market price of a property or asset if sold under competitive and open market conditions.