Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 20, Problem 7PS
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
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.
Give the difference between hedge funds and money market funds.
An analyst develops the following covariance matrix of returns:
Hedge Fund
Hedge Fund
Market Index
0.0289
0.00765
Market Index
0.00765
0.0225
Calculate the correlation of returns between the hedge fund and the market index.
Chapter 20 Solutions
Essentials Of Investments
Ch. 20 - Prob. 1PSCh. 20 - A fund manages a 3.6 billion equity portfolio with...Ch. 20 - Prob. 3PSCh. 20 - Prob. 4PSCh. 20 - Which of the following would be the most...Ch. 20 - Prob. 6PSCh. 20 - Which of the following hedge fund types is most...Ch. 20 - Prob. 8PSCh. 20 - Prob. 9PSCh. 20 - Is statistical arbitrage true arbitrage? Explain....
Ch. 20 - A hedge fund with 1 billion of assets charges a...Ch. 20 - Prob. 12PSCh. 20 - Prob. 13PSCh. 20 - Prob. 14PSCh. 20 - Prob. 15PSCh. 20 - 16. The following is part of the computer output...Ch. 20 - Return to the previous problem. LO202 a. Suppose...Ch. 20 - Prob. 18CCh. 20 - Prob. 19CCh. 20 - Prob. 1WMCh. 20 - Prob. 2WMCh. 20 - Prob. 3WM
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- What can you tell from the factor exposures of various hedge fund strategiesarrow_forwardQuestion 2 i) Given 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. ii) What is the significance of the Capital Market Line? To be more specific, what relationship does this line depict? Give a brief discussion on its application. iii) One important assumption behind portfolio theory is that investors are "meanvariance maximizers." What is the meaning of this? Explain why this assumption is important in the delineation of the efficient frontier. Question 3 Generally speaking, the cost of debt is cheaper than the cost of equity. Does it imply that a firm should increase its debt-to-equity ratio to as high as possible such that its corporate cost of capital can be minimized?arrow_forwardOf the following investment vehicles, which is the best and which is the worst? Choose from common stocks, mutual funds, ETFs, REITs. Explain why.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_forwardAn efficient capital market is best defined as a market in which security prices reflect which one of the following? Multiple Choice A Current inflation B A risk premium C All available information D The historical arithmetic rate of return E The historical geometric rate of returnarrow_forward1.What is the relationship between an investment’s risk and its return? Please provide examples if possible. 2. Difference between Institutional Investors and Individual Investors.arrow_forward
- Question 2 a) Plot the Security Market Line (SML).b) Superimpose the CAPM’s required return on the SML.c) Indicate which investments will plot on, above and below the SML?d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the grapharrow_forwardAn efficient portfolio is one that: Select one: a. maximises return for a given level of risk. b. maximises risk for a given level of return. c. minimises risk for a given rate of return. d. Both A and C. are efficient portfolios.arrow_forwardAn investor must look not only at the over-all return of a portfolio but also the risk of that portfolio to see if the investments return compensates for the risk it takes a. it depends b. maybe c. true d.falsearrow_forward
- A6) Finance In financial economic theory, an indifference curve shows: Select one: a. the one most desirable portfolio for a particular investor. b. the one most desirable market portfolio for all investors. c. all combinations of risk and expected return that are equally desirable to a particular investor. d. all combinations of portfolios that are equally efficient to all investors.arrow_forwardWhen a firm invests in money market instruments, it is taking _______ and should expect __________. Question 6 options: 1) high risk, high returns 2) high risk, low returns 3) low risk, low returns 4) low risk, high returnsarrow_forwardwhich one is correct? QUESTION 6 Given a portfolio of stocks, the envelope curve containing the set of best possible combinations is known as the a. efficient frontier. b. utility curve. c. last frontier. d. efficient portfolio. e. capital asset pricing model.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Portfolio Management; Author: DevTechFinance;https://www.youtube.com/watch?v=Qmw15cG2Mv4;License: Standard YouTube License, CC-BY