Global advisers company (GAC) is a registered investment counselling firm soley involved in managing securities portfolios. After much researchon the developing economy and capital markets of the country of south korea, GAC has decided to include and investment of south korea stock market in its emerging market commingled fund. However , GAC has not yet decided whether to invest actively or by indexing. Your opionion on the active versus indexing decision has been solicited. A summary of the research findings follows.

South korea's economy is fairly well diversified across agricultural and natural resources, manufacturing (both consumer and durable goods) , and a growing finance sector. Transaction costs in securities markets are relatively large in south korea because of high commisions and government "stamp taxes" on securities trades. Accounting standard and disclosure regulations are quite detailed, resulting in wide public availability of reliable information about companies' financial performance.

Capital flows into and out of south korea and foreign ownership of south korea securities are strictly regulated by and agency of the national government. The settlement procedures under these ownership rules often cause long delays in settling trades made by nonresidents. Senior finance officials in the government are working to deregulate capital flows and foreign ownership, but GAC's political consultant believes that isolation sentiment may prevent much real progress in the short term run.

a) briefly discuss four aspects of the south korea's environment that favour investing actively and four aspects that favour indexing?

b) recommend whether GAC should invest in south korea actively or by indexing and justify your recommendation based on the factors identified in part a)

c) because corporations do not actually raise any funds in secondary market, they (secondary markets) are less important to the economy than primary markets. Discuss