What makes this book special is that it presents an insider’s perspective of what went right, what went wrong, and what are the lessons learned from the crisis. David Belmont had a front row seat and role to play with hedge funds as a crisis scenario few had contemplated played out—a scenario with not only huge investment risks, but also counterparty, funding, and operational risks. Want to know what really happened to hedge funds during the financial crisis? The holistic view is presented here: how to manage a hedge fund with investment, funding, counterparty and operational risks in mind.
Sung Cheng Chih
Timothy M. Curran, CFA
The Economics and Finance of Hedge Funds updates an earlier review by the authors. It includes reviews of recent studies on topics that were covered in the earlier survey, and summarizes research on new topics that were not part of the previous survey. These new topics cover a broad gamut of issues, ranging from hedge funds' use of leverage and exposure to different risks to their impact on various asset markets. The Economics and Finance of Hedge Funds consists of five broad sections. The first section reviews the literature examining both the time-series and cross-sectional variation in hedge fund performance. Time-series performance studies cover return generating processes, dynamic risk exposures, and determination of managerial skill. The second section covers studies focused on the cross-sectional relations between hedge funds' characteristics (including contractual features and time-varying features such as size and age) and fund performance. The third section analyzes the literature on the sources and nature of risks faced by hedge fund investors. In particular, the authors discuss risks that can arise from managerial incentives and sources of capital. The fourth section summarizes research on the role of hedge funds in the financial system. Specific topics here include hedge funds' impact on systemic risk, asset prices, and liquidity provision in financial markets. The fifth and final section focuses on potential biases and limitations of hedge fund data sources.
Capital adequacy allocation is not yet a legal requirement for hedge funds, but given the increase in global investigations, the high failure rate and lack of consistent benchmarking standards, the idea of financial reserves and enforced operational risk management are appealing prospects for the hedge fund investment community. Most hedge funds have superficial risk management but very few apply a thorough operational risk methodology. Independent consulting risk manager, Armelle Guizot, presents in-depth classifications of the range of operational and systemic risks and provides the reader with a benchmark to allocate capital reserves to support them. Based on Guizot's operational and market risk experience gained through working with high profile clients such as JP Morgan, Sumitomo Mitsui and Merrill Lynch, the reader will find that this report: covers all the major operational and regulatory risks associated with hedge funds; provides infrastructural risk maps; introduces a simple methodology to calculate capital adequacy; incorporates industry risk management surveys to benchmark against peers; and encourages fund managers to think ahead. This report provides hedge fund managers with a complete set of risk principles and standards to avoid operational risks and potential financial losses. At the same time it proves a valuable resource for those without advanced quantitative knowledge, allowing them to quickly grasp the hidden risks of hedge funds.
"Closed-End Funds, Exchange-Traded Funds, and Hedge Funds: Origins, Functions, and Literature is a concise and valuable book that will be of interest to individual investors, financial professionals, and academic researchers, alike. It provides a brief history and institutional discussion of these investment companies and also presents a summary of the research on these funds. Investment practitioners will find the book useful as a reference and as a quick refresher on the current state of knowledge regarding each fund type. Equally important, it provides academic researchers with an accurate institutional framework within which to cast their theoretical models, and a point of departure for expanding the empirical analysis for improving our understanding of these funds. All-in-all, this is a very valuable book; I highly recommend it." (John J. Jackson, Professor of Economics, Auburn University) "Professors Anderson, Born, and Schnusenberg provide a valuable service in this monograph. The practical significance of closed-end funds, exchange-traded funds, and hedge funds has increased dramatically in recent years, but all too many academics and investors know little about them. This text presents a carefully-focused and understandable description of these investment vehicles, highlighting the big, unresolved questions, while also including careful and fair accounts of the state of the literature. Nothing extraneous clutters the presentation, but, more importantly, nothing necessary is left out. Highly recommended." (T. Randolph Beard, Professor of Economics and Public Policy, Auburn University) "This book is both useful as a reference book and as an additive, educational overview of ETFs and hedge funds, as well as CEFs. In today's tumultuous markets, much reference is made to these subjects without a clear understanding of the vehicles, their structure and their history. This is a very timely publication and should be viewed as an important read. The book contains definitive explanations and also includes an excellent summary of past works in this area. Readable, informative and highly useful as a reference source." (Kathleen A. Wayner, President and CEO, Bowling Portfolio Management)
The best-selling Fundamentals of Corporate Finance (FCF) has three basic themes that are the central focus of the book:
The Tenth Edition continues the tradition of excellence that has earned Fundamentals of Corporate Finance its status as market leader. Every chapter has been updated to provide the most current examples that reflect corporate finance in today's world. The supplements package has been updated and improved, and with the enhanced Connect Finance and Excel Master, student and instructor support has never been stronger.