Finance 3000 5day Essay Example | Topics and Well Written Essays - 3000 words

Finance 3000 5day - Essay ExampleThis dissertation explores the divers(a) strategies, quality measurement methods, risk analysis, and quantifiable methods used by coronation reign overrs. A comprehensive definition of hedge funds is also contained herein. thereafter is a description of how they managers implement various strategies to gain profits, recover losses, avoid losses, as well as maintain an inflow of income. This dissertation also details various risk functions and how they are used to date that to predict the trades reaction as well as results after certain contingent events. Defining Hedge Funds A hedge fund is a privately owned and managed investment (Goldberg & Korajcsyk, 2010). Such a fund would invest in a wide range of elements. This would include various strategies, markets, and investment methods. Hedge funds provide the investor a style by which he/she can considerably navigate market rules. However, the fund is not autonomous. The fund manager has to fol low specific rules set diversion for hedge funds. Each country has specific rules that govern the hedge fund systems (Alexander, 2008). Hedge funds own a particularly characteristic of being open-ended. The investor has room to add to the investment or withdraw in all together. This is un give care other custom funds that only allow specific times for addition and onanism (Chavas, 2004). Other funds also have specific categories within which they allow certain amounts of withdrawal or addition. The calculation of a hedge fund value involves the use of the asset value. Each fund has a specific earn value. This value helps determine the share value of the fund. Hedge funds are like mutual funds for the rich. This is because for one to participate in hedge fund, the investor take aways to meet certain requirements. They need to have a particular experience in investment and have to have certain net value. This locks out the commoner from engaging in hedge funds. Hedge funds are p layground for sophisticate investors. Hedging is an investment method that reduces the risk while increasing return on investment. However, this is part truth. ripe day hedging makes use of several other strategies. Such strategies include aggressive growth, funds of funds, and market timing (Alexander, 2008a). There are many more strategies engrossed by hedge fund managers. hotshot thing that is common among all hedge funds is specificization. Each hedge fund manager has his or her strength and weakness (Agarwal & Naik, 2005). It is obvious that one would have to rely mainly on their own strength. This means that a manager would apply his or her own expertise in managing the fund. This results in the fund having special characteristics. The managers are very professional and deliver on their promises. They perform their duties exemplarily thus being awarded the opportunity to manage much(prenominal) large sums of money. Investment Strategies used by Hedge funds Hedge funds em ploy several strategies. One of the main strategies involves aggressive growth. In this strategy, the manager would find equities expected to grow aggressively, and he/she would invest in them (Lerner, 1995). Aggressive growth is with respect to earnings per share. The P.E ratios for such equities are frequently noble while the dividend are meager or not present at all. Small cap stocks often experience rapid growth. This is because they are often specialized into banking, technology, or biotechnology. The means for hedging in such a strategy are by shorting equities with poor projections. This type of strategy is highly volatile and