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Consider the following statements regarding Asset Management Companies (AMCs):
- It invests the funds pooled from individual investors in securities.
- The Reserve Bank of India (RBI) governs and controls every AMC in India.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding Asset Management Companies...
Capital markets regulator the Securities and Exchange Board of India (SEBI) recently proposed that asset management companies (AMCs) should set up surveillance and internal control systems for the deterrence of possible market abuse and fraudulent transactions.
About Asset Management Companies (AMCs):
- It is a firm that invests the funds pooled from individual investors in securities with the objective of optimal return for investors in exchange for a fee.
- AMC maintains the diversity of portfolio by investing in both high-risk and low-risk securities such as stock, debt, real- estate, shares, bonds, pension funds, etc.
- Because they have a larger pool of resources than the individual investor could access on their own, AMCs provide investors with more diversification and investing options.
- AMCs are colloquially referred to as money managers or money management firms.
- Those that offer public mutual funds or ETFs are also known as investment companies or mutual fund companies.
- SEBI is the Indian Capital Market Regulator which governs and controls every AMC in India.
Hence only statement 1 is correct.
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Community Answer
Consider the following statements regarding Asset Management Companies...
Statements:
1. It invests the funds pooled from individual investors in securities.
2. The Reserve Bank of India (RBI) governs and controls every AMC in India.
Explanation:
Let's analyze each statement separately:
Statement 1: It invests the funds pooled from individual investors in securities.
This statement is correct. Asset Management Companies (AMCs) are financial institutions that pool funds from individual investors and use those funds to invest in various securities such as stocks, bonds, mutual funds, and other financial instruments. AMCs act as intermediaries between the investors and the securities markets and manage the investment portfolios on behalf of the investors.
Statement 2: The Reserve Bank of India (RBI) governs and controls every AMC in India.
This statement is incorrect. The Reserve Bank of India (RBI) is the central bank of India and primarily responsible for the regulation and supervision of banks and the monetary policy of the country. However, the regulation and control of Asset Management Companies (AMCs) in India are primarily done by the Securities and Exchange Board of India (SEBI), which is the regulatory authority for the securities market in the country. SEBI regulates the functioning of AMCs and ensures compliance with the necessary rules, regulations, and guidelines.
Conclusion:
Based on the analysis of the statements, it can be concluded that only statement 1 is correct. Statement 2 is incorrect as the Reserve Bank of India (RBI) does not govern and control every AMC in India. The correct answer, therefore, is option 'A' - 1 only.
1. It invests the funds pooled from individual investors in securities.
2. The Reserve Bank of India (RBI) governs and controls every AMC in India.
Explanation:
Let's analyze each statement separately:
Statement 1: It invests the funds pooled from individual investors in securities.
This statement is correct. Asset Management Companies (AMCs) are financial institutions that pool funds from individual investors and use those funds to invest in various securities such as stocks, bonds, mutual funds, and other financial instruments. AMCs act as intermediaries between the investors and the securities markets and manage the investment portfolios on behalf of the investors.
Statement 2: The Reserve Bank of India (RBI) governs and controls every AMC in India.
This statement is incorrect. The Reserve Bank of India (RBI) is the central bank of India and primarily responsible for the regulation and supervision of banks and the monetary policy of the country. However, the regulation and control of Asset Management Companies (AMCs) in India are primarily done by the Securities and Exchange Board of India (SEBI), which is the regulatory authority for the securities market in the country. SEBI regulates the functioning of AMCs and ensures compliance with the necessary rules, regulations, and guidelines.
Conclusion:
Based on the analysis of the statements, it can be concluded that only statement 1 is correct. Statement 2 is incorrect as the Reserve Bank of India (RBI) does not govern and control every AMC in India. The correct answer, therefore, is option 'A' - 1 only.
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Consider the following statements regarding Asset Management Companies (AMCs): It invests the funds pooled from individual investors in securities. The Reserve Bank of India (RBI) governs and controls every AMC in India.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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