Questions from General Investment

Q: Return again to Problem 14. Now suppose that the manager misestimates

Return again to Problem 14. Now suppose that the manager misestimates the beta of Waterworks stock, believing it to be .50 instead of .75. The standard deviation of the monthly market rate of return i...

Q: Here are data on three hedge funds. Each fund charges its

Here are data on three hedge funds. Each fund charges its investors an incentive fee of 20% of total returns. Suppose initially that a fund of funds (FF) manager buys equal amounts of each of these fu...

Q: How might the incentive fee of a hedge fund affect the manager’s

How might the incentive fee of a hedge fund affect the manager’s proclivity to take on high-risk assets in the portfolio?

Q: Why is it harder to assess the performance of a hedge fund

Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical mutual fund manager?

Q: Which of the following is most accurate in describing the problems of

Which of the following is most accurate in describing the problems of survivorship bias and backfill bias in the performance evaluation of hedge funds? a. Survivorship bias and backfill bias both resu...

Q: Which of the following would be the most appropriate benchmark to use

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.

Q: With respect to hedge fund investing, the net return to an

With respect to hedge fund investing, the net return to an investor in a fund of funds would be lower than that earned from an individual hedge fund because of: a. Both the extra layer of fees and the...

Q: Is statistical arbitrage true arbitrage? Explain.

Is statistical arbitrage true arbitrage? Explain.

Q: How would the application of the BL model to a stock and

How would the application of the BL model to a stock and bond portfolio (per the example in the text) affect security analysis? What does this suggest about the hierarchy of use of the BL and TB model...

Q: Jand, Inc., currently pays a dividend of $1.

Jand, Inc., currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of Jand’s shares based on the constant-growth dividend discount model is $32.03, what...