CHAPTER 7

Investment Management1

The social purpose of investment management is then the allocation of capital to its most productive application on the right-hand rotor of Figure 1.2. As mentioned above, families and governments perform much of this function outside the market. In this chapter, I barely touch on ways of financing small business (often family owned), which is where much of the most creative work in finance takes place. If you are interested, the paper by Allen Berger and Gregory Udell gives a good idea of this process and its participants, as well as warnings about the risks. Small and medium enterprises (SMEs) are widely regarded as major contributors to job creation. In size terms, however, they are not important to insurance ...

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