Showing papers on "Investment management published in 1989"

Public Financial Management

Abstract: This concentration is designed for students wishing to understand the manner in which efforts to finance public sector activities affects public policy. Public finance provides a framework for understanding policy choices and the implications of program structural features within the context of economic responses of service populations, the general public, and policymakers. The concentration combines models of public sector economics, including mechanisms of public choice, service pricing, taxation and expenditure structures, with economic analytic frameworks to understand mechanisms available for influencing public behavior and likely outcomes of alternative tax, expenditure and regulatory policy options. Faculty advising on this concentration is provided by Professors Jocelyn Johnston and Daniel Mullins.

Global factors: Fact or fiction?

Abstract: The management of global investment portfolios is a complex extension of single-country or domestic fund management. Clearly currencies must be explicitly considered, and the cultural differences among countries raise some important questions regarding investor preferences, market efficiency, and security analysis. Another aspect of global portfolio management concerns the degree to which countries and companies within countries are linked—the extent to which international markets are integrated or segmented. l

Fundamentals of Investments

Abstract: Part 1 The investment environment: buying and selling securities security models the determination of security prices taxes inflation. Part 2 Modern portfolio theory: the portfolio selection problem efficient sets risk-free lending and borrowing the capital asset pricing model factor models arbitrage pricing theory. Part 3 Common stocks: characteristics of common stocks financial analysis of common stocks dividend discount models dividends and earnings investment management portfolio performance evaluation. Part 4 Fixed-income securities: types of fixed-income securities fundamentals of bond valuation bond analysis bond portfolio management. Part 5 Alternative investments: investment companies options futures extended diversification.

Asset/liability Management for the Life Insurer: Situation Analysis and Strategy Formulation

Abstract: Asset/Liability Management for the Life Insurer: Situation Analysis and Strategy Formulation ABSTRACT Asset portfolios of life insurers support the performance of obligations to customers and contribute to the profitability of insurers. The obvious risks associated with these portfolios are magnified by the instability of financial markets. Insurers should have a heightened awareness of the simultaneous effects of unstable markets and changes in interest rates not only on the assets, but also on liabilities. This study examines the current operational status and planning procedures of seven asset/liability management processes appropriate for life insurers and offers recommendations. Introduction The concepts and techniques of asset/liability management (ALM) [see Babbel and Stricker (1987), Babbel and ,amm-Tennant (1987)] are of concern to both industry leaders and academicians. The simultaneous effects of unstable financial markets and changes in interest rates on both the assets and liabilities of insurers have resulted in the recognition of ALM as a necessary part of prudent portfolio management. Before implementing a comprehensive ALM process, a life insurer should complete a strategic planning process which includes three distinct phases: situation analysis, strategy formulation, and implementation. This study analyzes the planning, evaluation and use of ALM techniques appropriate for the life insurance industry. In addition, the advantages and disadvantages of each technique are identified. Guidelines for an investment management strategy are provided based on situation analysis. Further research is necessary for completion of the strategy formulation and implementation phases. The article proceeds in the following manner: data source and respondents are described; the first phase of a strategic ALM plan--situation analysis--is addressed by analyzing the current operational status of seven ALM processes and the planning/evaluation procedures currently used by the industry regarding ALM; and conclusions and recommendations are given. Data and Survey Method A survey of management philosophy and utilization rates of seven ALM techniques was mailed to senior investment officers at a random sample of 250 life insurers, during late 1986 and early 1987. Seven ALM techniques were identified in the survey, nevertheless other techniques or variations may be appropriate for a particular product or circumstance. Respondents were invited to discuss these additional ALM techniques, such as dedication or contingent immunization. Ninety-four insurers responded; 102 were represented because, in some cases, the investment process was centrally performed for a group of insurers. Respondents were invited to submit a partially completed questionnaire whenever data were unavailable. As a result, all questions yielded fewer than 94 responses. Respondents were profiled by six characteristics: organizational type, location, size, number of state licenses, product mix, and asset mix. The respondents are a fair representation of the industry. Forty-two percent of the firms are mutual insurers and 58 percent are stock insurers. Home offices of the firms are predominantly located in the northeast although all regions of the United States are represented. Seventy percent of the firms report net invested assets of $4 billion and less, whereas 30 percent report net invested assets greater than $4 billion. Forty-four percent of the firms are licensed to sell insurance products in 50 states with the remaining 56 percent licensed to sell in fewer states. The product mix of the firms include numerous interest sensitive products and the representation of these products as a percentage of net statutory liabilities is significant. Exposure to interest rate risk is evident among the firms due to a significant percentage of invested assets held in long-term bonds. …

Whose company is it, anyway?

Abstract: T hree developments of real significance have taken place in the business segment of United States society since the end of World War 11. The first is the transition from founder/family management to professional management in most publicly held U.S. companies. The second is the globalization of most large successful US. business enterprises. The third is the institutionalization of the capital allocation process through the rapid growth of public and private retirement funds and mutual funds supervised by professional investment managers. And these three developments mean that we live in a wonderful world where huge corporations with market values of $10 billion or $20 billion or $50 billion are managed by professionals with no meaningful ownership positions. Shares in turn are held and proxies voted by professional money managers of huge portfolios, also with no significant ownership position. It seems logical to ask the question: “Whose company is it, anyway?‘. How often have you seen the following sequence of events in recent years? A company we’ll call ABC Manufacturing has been conducting its business with reasonable success. It has achieved average sales growth and an average return on its investment. Its shareholders have received an average reward. The shares probably sell around stated book value, which, in view of the inflation of the past fifteen years, means that they are well under replacement value. Suddenly, along comes a so-called corporate raider who has accumulated between 5% and 10% of the stock who makes an offer for the balance. ABC stock has been trading at around $30 per share for some months; the corporate raider‘s aggressive buying program and accompanying information leaks have pushed the stock up to $36; the tender offer is at $48 per share. After a few hours of deliberation, ABC‘s management and board of directors announce that the company is declining the offer because it is “inadequate.” The first thing that I, and probably many other investors, do at this point is pull out the company’s proxy statements of the past several years. Almost invariably I discover two things. First, members of management and of the board of directors own very little stock in most cases, less than 1% of the total. Second, there have been virtually no open market purchases of ABC stock by either management or directors for years. In many cases, management may have exercised options when the market price was 100% or so above the option price, but this is the extent of purchase activity. Further, management sales of stock usually have exceeded purchases through the exercise of options. The obvious question is, “If ABC stock was selling at less than 60% of a price that is ’inadequate,’ why weren‘t insiders buying aggressively and even mortgaging their houses to finance stock purchases?”.

Commercial bank management

Abstract: Part 1 Assets: evaluating bank performance liquidity management investment management principles of commercial lending the process of commercial lending the process of commercial lending continued real estate lending consumer lending. Part 2 Liabilities and equities: managing bank liabilities bank capital management. Part 3 Asset/liability management: an overview of asset/liability management - dollar gap and duration gap techniques of asset/liability management - futures, options and swaps. Part 4 International banking: international banking international finance and lending. Part 5 Off-balance sheet products and services: off-balance sheet activities the payments systems bank management issues.

Institutional investors and industrial relations data: an empirical survey

Abstract: Financial institutions play a major role in investing funds in the shares of individual companies. To what extent do investment managers and analysts take account of industrial relations information when making their decisions?

On the integration of time-phased material and net operational cash requirements

Abstract: In this paper the usefulness of a system for (detailed) forecasting of timephased net operational cash requirements based upon (detailed) time-phased material (resource) requirements is examined. It is outlined how such a system may be realised in practice. The (dis)advantages of this system with respect to presently used systems are discussed as well as the requirements for its useful implementation.