Answer to Question #160049 in Management for Prabhdeep

Question

1.Explain the role of asset management companies in the banking industry ? (please give at least 8 points for role with elaboration)

2.what do you understand by lending in banking? (please answer in 100 to 150 words)

Answer 1

1)Asset management companies (AMCs) are firms pooling investments from various individual and institutional investors. The company manages the investment by investing in capital assets such as stocks, real estate, bonds, and so on. The asset management companies have professionals called fund managers who decide where the pooled money is invested. Fund managers identify the investment options that are in line with the objectives of the investors.

The fund manager first evaluates various metrics such as market and industry risks, before making a decision that is in line with the investment goals. For instance, a debt fund invests mostly in bonds and government securities to keep the risks minimal. But an equity fund mainly focuses on equities (shares) of companies. The ultimate aim here is to make profitable investment decisions that will give investors maximum returns.

2) Lending (also known as "financing") occurs when someone allows another person to borrow something. Money, property, or another asset is given by the lender to the borrower, with the expectation that the borrower will either return the asset or repay the lender. In other words, the lender gives a loan, which creates a debt that the borrower must settle.