INVESTMENTS-CONNECT PLUS ACCESS
11th Edition
ISBN: 2810022611546
Author: Bodie
Publisher: MCG
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Question
Chapter 26, Problem 7PS
Summary Introduction
To select:
The hedge fund which is earning a return almost same to risk-free return.
Introduction:
A hedge fund is a fund which is outside from governmental law and jurisdiction. It is mainly for a private limited
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Students have asked these similar questions
Which of the following hedge fund types is most likely to have a return that is closest to risk-free?a. A market-neutral hedge fund.b. An event-driven hedge fund.c. A long/short hedge fund.
Which of the following would be the most appropriate benchmark to use for hedge fund evaluation?a. A multifactor model.b. The S&P 500.c. The risk-free rate.
What can you tell from the factor exposures of various hedge fund strategies
Chapter 26 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
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- Of the following investment vehicles, which is the best and which is the worst? Choose from common stocks, mutual funds, ETFs, REITs. Explain why.arrow_forwardGive the difference between hedge funds and money market funds.arrow_forwardDescribe how a risk-free hedge portfolio can be created usingstocks and optionsarrow_forward
- How might the incentive fee of a hedge fund affect the manager’s proclivity to take on high-risk assets in the portfolio?arrow_forwardHedge funds are known for generating higher returns. Discuss the investment strategies that are commonly used by hedge funds and critically assess the ability of hedge funds in generating excess returns by drawing on empirical evidence available in the literature.arrow_forwardWhich are the most efficient combination of securities that provides investors with maximum portfolio returns as portfolio risk increases?arrow_forward
- Which of the following is TRUE? To construct a capital market line, we use expected return as y-axis and beta as x-axis On the capital market line debt securities are located to the right of the market portfolio To construct a security market line, we use expected return as y-axis and beta as x-axis Market portfolio lays at an intersection of the average indifference curve of a risk-averse investor and the efficient portfolioarrow_forwardWould a market-neutral hedge fund be a good candidate for an investor’s entire retirement portfolio? If not, would there be a role for the hedge fund in the overall portfolio of such an investor?arrow_forwardIt measures how much rate of return the fund manager/fund generates per unit of systematic risk (beta)? a.PSE b.Jensen Index c.Treynor Index d. Sharpe Indexarrow_forward
- The security market line depicts: a. Expected return as a function of systematic risk (indicated by beta) b. The market portfolio as the optimal portfolio of risky assets c. The relationship between a security’s return and the return on the index d. Portfolio combinations of the market portfolio and the risk-free asset e. Expected return as a function of volatilityarrow_forwardGiven a simple world with two assets, a bond fund and a stock fund, clearly detail the steps involved in arriving at the 1) efficient frontier, and 2) market (optimal) portfolio.arrow_forwardThe security market line depicts:a. A security’s expected return as a function of its systematic risk.b. The market portfolio as the optimal portfolio of risky securities.c. The relationship between a security’s return and the return on an index.d. The complete portfolio as a combination of the market portfolio and the risk-free asset.arrow_forward
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