21 Flashcards
1
Q
hedge fund risks and objectives?
A
Hedge funds usually issue an offering memorandum, a legal document stating the objectives, risks and terms of investment involved with a private placement.
2
Q
hedge fund’s net market exposure eg. if it is short 2,000 shares of ABC at $20 and long 3,000 share of DEF at $19?
A
The two trades are worth $40,000 and $57,000 respectively. The “unhedged” component is $17,000 (57,000 - 40,000 = 17,000). The net market exposure is calculated as (57,000 - 40,000)/57,000 = 29.8%
