Risk arbitrage (or merge arbitrage) is a trading strategy related to M&A transactions. For example‚ if an M&A transaction is carried out by means of share exchange between the buzzer and the target‚ then an arbitrageur may short sell buyer’s stocks and purchase stocks of the target. Until the acquisition is completed‚ the stock of the target typically trades below the purchase price. After the merger is completed‚ the target’s stock will be converted into stock of the acquirer based on the
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Hedge Trimmer Many folks take great pride in maintaining a healthy‚ lush‚ and manicured lawn. One of the aspects that can be included in these lawns is hedges‚ which are boundaries that consist of closely growing bushes and shrubs. If hedges are not properly kept up‚ they can make a house and its lawn look messy‚ so it is important if you have hedges to maintain them with regular‚ basic trimming at the very least. This is to ensure their growth and training‚ keeping them healthy and growing appropriately
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| FI475-Project Study | Six Derivatives Mishaps | 2012/5/8 | Sumitomo (future contracts) Background: 1996‚ Sumitomo Corporation was one of the top copper market makers in the world. During the over 10 years under Hamanaka‚ who was a genius charged on allegations that he could manipulate the price of the metal‚ Sumitomo lost at least $1.8 billion as a result of what it said were unauthorized trades‚ which then lost a third of its value on world markets in less than two months. The affair was
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thought to lower risk–weighted assets • But became a speculative bet on the shape of the yield curve “flawed‚ complex‚ poorly reviewed‚ poorly executed‚ and poorly monitored. The portfolio has proven to be riskier‚ more volatile and less effective as a hedge than we thought‚” Intro Abuse Risk Activities Policy LIBOR scandal • LIBOR/EURIBOR benchmark interest rate (average • • • • reported rate) Very costly because many contracts (e.g. derivatives and mortgages) have the rates set
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CASE STUDY: Strategic Capital Management ------------------------------------------------- NOTES SCM LLC 12.9.1998 – Elena raised $20 million for her new fund Interested in Ubid‚ recently had an IPO—lucrative Internet-sector investment? Mandate of generating 10% annual returns charge investors 2% management fee of assets under management an incentive fee equal to 20% of profits. Mandatory minimum investment horizon of 2 years Ubid & Creative Computers creative computers – a
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Valuation‚ and Managing Investment Portfolios: A Dynamic Process. Ackerman‚ Carl‚ Richard McEnally‚ and David Ravenscraft. 1999. “The Performance of Hedge Funds: Risk‚ Return‚ and Incentives.” Journal of Finance. Vol. 54‚ No. 3: 833–874. ACLI Survey. 2003. The American Council of Life Insurers. Agarwal‚ Vikas and Narayan Naik. 2000. “Performance Evaluation of Hedge Funds with OptionBased and Buy-and-Hold Strategies.” Working Paper‚ London Business School. Ali‚ Paul Usman and Martin Gold. 2002. “An Appraisal
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NEW YORK (Reuters) - Newly issued shares in Facebook Inc (FB.O) may have a hard time in the coming week if lead underwriter Morgan Stanley stops supporting the stock and managers lower down in the IPO book who were hoping for an early surge decide to get out before going underwater. Facebook on Friday sold 421 million shares of stock in a deal that valued the company at more than $100 billion. But investors‚ expecting a first-day pop in price‚ instead saw it close just 0.6 percent above the IPO
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Background Pine Street Capital is a market-neutral hedge fund in the technology field and is facing market risk and has to decide which way to use in order to hedge the risk. It can either use short selling of NASDAQ or options hedging strategy. Each strategy has its own advantage in different economic conditions. As the fund has just gone through a volatile period in NASDAQ’s history‚ PSC has to choose between two choices. Choice 1: Continuing to hedge market risk by short selling Choice 2: Switching
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York‚ NY 10017 Subject: New market for hedge funds Dear Mr. Dimon: It is a pleasure for ABS Consultants to be working with J.P. Morgan Chase & Co. As follow-up to our initial conversations‚ we have considered various trends occurring within the financial arena‚ and have identified one trend specifically within the space of alternate investments that would most benefit your firm. The concept underlying this trend is the lack of accessibility to hedge funds for non-accredited retail investors
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I’m writing this letter to express my interest in attending your master’s program in finance. Background: I finished my Secondary education from Sri Sankara Senior secondary school (CBSE)‚ Adyar in the year 2008 falling within the top 3 scorers in my class with merit in Accountancy and Business studies. I was then accepted into Loyola college (Rated among the top 3 colleges in India for Arts & science) to pursue my bachelor’s degree in Commerce. My 3 years at Loyola helped me to experiment
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