Book Series
Theories of the Firm
Fifth Edition
Demetri Kantarelis

Chapter 6: The money-managing firm

152-162Money-managing firms make their expertise available to investors (large institutions and wealthy individuals) who are in need of advice as they pursue their financial goals. Employees in money-managing firms are highly trained investment professionals who devote their full time to scrutinising and responding to the continually changing global economic environment subject to their clients' utility profiles or specific financial objectives. Table 1 below provides a list of the top money-managing firms along with the top pension funds in the USA. The money-managing firm operates like any other profit seeking entity and as such, it may be described by traditional models like those outlined in previous chapters. However, this chapter focuses on that part of the business (perhaps the most important part) that affects revenue; namely, the management and performance of a client's portfolio.
1 The capital asset pricing model
2 The impact of a risk-free asset and the Sharpe ratio
3 The relationship between a security's risk and its expected rate of return
4 Summary
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