It has been observed that individual new business, all group insurance and total new business has increased by 62 times, 20 times and 34 times respectively from pre reforms period to post reforms period. As far as share of LIC and private companies to total investment of the life insurance sector was concerned, LIC contributed the maximum share of investment. During the study period investments of LIC increased by 3 times. The percentage share of investment of LIC to total investment of life insurance sector was always more than 80% during the study period. Life fund showed an increase of 58 times from its journey of pre reforms period to post reform period. During the period 2005-06 to 2012-13, it has increased by three times. In case …show more content…
In order to face the competition with the private sector mutual funds , the policy makers of LIC have to study the exact cause for its less market share, thereby initiate proper remedial measures within its control. Policy makers should design customized mutual fund schemes to suit the varied requirements of investors. LIC can play more useful role in capital market to cater to the whopping financial needs of up-coming enterprises, especially in infrastructure sector. The Corporation should employ larger funds in corporate securities. For ensuring adequate safety of investments and steady return on them, it is necessary to diversify the investment portfolio in terms of units, industries and regions. Unfortunately, there has not been any significant diversification of the LIC‟s portfolio among different industries and regions. LIC should provide funds to the financial institutions which, in turn, would be able to satisfy growing needs of industrial enterprises and thus minimise the gap existing in the capital market. Such investment is more safe and profitable and can provide a better alternative to government securities. Definition of approved investment should be broadened to include loan against policies for industrial purpose. This will also have salutary effect upon the development of small scale industries. The LIC has a long way ahead to penetrate the untapped market. It has to focus more on pension and annuity schemes - the preferred products of the customers and bring in innovative features in these schemes from time to time so as to attract new customers and retain the existing ones. The Corporation should also provide flexibility to its customers to switch between the various investments options to maximize returns round the
Firstly, the threat of new entrants is relatively low due to the high start-up costs and other resources to logistically operate an insurance company. RBC’s long history and establishment in the financial industry benefited them when they acquired other insurance companies to build their portfolio.
The first thing Tremont has to do is to start using a different discount rate. Rather than using the CFO’s suggested cost of debt as the discount rate, it would be more appropriate to use Weighted Average Cost of Capital, as Tremont uses a mix of debt and equity.
Given the complex nature of the financial markets they should be regulated primarily by the SEC. Additionally since there is specific legislation enacted to regulate these markets, and then the SEC’s oversight should be the standard to which the stakeholders are held.
Growth of financial market in Brazil stimulated mainly through developed markets of coffee, soybeans, iron ore and other minerals. Because prices on those commodities are high, traders are making good profits. The Brazilian sugar industries attract a lot of domestic and international investors and are doing very well in IPOs. In addition, Brazil has a modern financial market; including a solid banking system, a state-of-the-art payment system and a reliable market infrastructure, with the capacity to process ten million trades per day. (Your Partner for Brazil) In 2002, the Brazilian Central Bank launched the Brazilian Payment System, which allows final and irrevocable real-time transfers. (Financial Sector and Capital Markets).
RBC Financial Group uses a customer relationship management (CRM) strategy that provides a variety of services for a variety of clients. The strategy allows for individual customers to trust RBC and develop a personal relationship with each and every client. One major factor that allows CRM to operate effectively is the use of technologies and analytics to help classify each client’s financial situation. These customer profitability-based techniques allowed RBC to categorize their clients into A, B, and C groups so that the sales teams could optimize their efforts in catering to these different clients. This strategy holds the following strengths: optimizing sales efforts to different customers, easily accessible electronic sales leads, centralized and standardized financial decisions, and building personalized and sustainable customer relationships. There are a few weaknesses to the system though including the complexity in predicting future positions of companies despite the use of analytics as well as the complexity in creating consistency when using these
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When discussing the cost of equity capital, or the rate of return required by investors for their share expenses, there are three main models widely used for analyzation. These models are the dividend growth model, which operates on the variable of growth and future trends, the capital asset pricing model (CAPM), which operates on the premise that higher returns are a result of higher risk, and the arbitrage pricing theory (APT), which has a more flexible set of criteria than CAPM and takes advantage of mispriced securities
This paper will serve as a discussion on the topic of investment banking. In this paper the author includes various articles and thoughts that help to understand the background and principle of investment banking. This discourse will attempt to address this issue through explaining what investment banking is, introducing major investment bankers, and how investment banking affects our globally economy. Investment Banking Defined Investopedia (2008) stated this definition about investment banking, “A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations.
The execution of our investment strategy occurred in three stages. First, we invested in t-bills and bonds according to our original set out investment plan. This was to decrease potential losses and risk associated with the declining equity market. Therefore, we invested about two hundred thousand of our funds into these low risk assets to maintain buying power. Due to inflation, we did not want to lose buying power by leaving funds in an account without earning interest. Further, we invested a small portion of funds into the commodity market. With a slumping equity market and a positive outlook on the gold commodity, we invested in Gold Corporation at the same time we invested in income assets.
Capital Asset Pricing Model (CAPM) is an ex ante concept, which is built on the portfolio theory established by Markowitz (Bhatnagar and Ramlogan 2012). It enhances the understanding of elements of asset prices, specifically the linear relationship between risk and expected return (Perold 2004). The direct correlation between risk and return is well defined by the security market line (SML), where market risk of an asset is associated with the return and risk of the market along with the risk free rate to estimate expected return on an asset (Watson and Head 1998 cited in Laubscher 2002).
According to Investopedia (Asset Allocation Definition, 2013), asset allocation is an investment strategy that aims to balance risk and reward by distributing a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon. There are three main asset classes: equities, fixed-income, cash and cash equivalents; but they all have different levels of risk and return. A prudent investor should be careful in allocating each asset class to his portfolio. Proper asset allocation is a highly debatable subject and is not designed equally for everybody, but is rather based on the desires and needs of the individual investor. This paper discusses the importance of asset allocation, the differences and the proper diversification within the portfolio.
The financial objectives of the investor determines what types of assets to be used. In this paper a quantitative approach of choosing the portfolio will be discussed.
J. David Cummins, A. S. (1999). Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management: Efficiency, Technology, and Risk Management. Springer.
For an organisation to rise fund, they usually tend to look at the stock market and capital market to do it so. This is two markets are usually seemed similar by the investors as they both contributes to the development of an economy. But there are significant difference between them. The capital market is a market that consist of stock market as well as the bond market. As a result, the capital market provides a long-standing finance using the debt capital and the equity capital. Capital markets divided into two sectors known as primary markets and secondary markets. The primary market is where securities are issued for the first time whereas the secondary market is where securities that have been already issued are traded among investors (Difference...
“Financial management is just managing the limited financial resources of the organization has." This includes the use of cash and other assets such as equipment. Financial management has a different meaning than “financial management is the study of obtaining funds and their effective and judicious use, in terms of the overall objectives of the company." The important role of financial management has increased significantly in recent times. Factors such as economic unpredictable turns, fluctuations in interest rates, inflation and disinflation require processing financial management skills of first level. There is a demand for financial management in many sectors of society, including the construction industries. Study of financial management has developed over time in response to changing needs of business management. In general, the field of finance is attached to the economics and accounting. Finance was recognized as an independent field of study in 1900. Due to the Great Depression of the 1900s, the emphasis shifted from the capital fund for the perseverance of capital and maintenance of liquidity. Government intervention in the financial side of the business was strengthened in this period. The most important steps of contemporary financial management began in the mid- 1950s. The nature of financial management was interested in studying the fixed assets management of capital budgets , the efficient use of existing assets , capital structure the composition and the dividend policy . The risk-return relationship has also been emphasized by the last 30 years. Overall objective is to maximize long- term shareholder of the company’s wealth, increasing the market value (price) of shares