Hedging financial

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ACKNOWLEDGEMENT

I would like to take this chance for thanking my research facilitator, friends & family for support they provided & their belief in me as well as guidance they provided without which I would have never been able to do this research.

DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, & this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views & not essentially which are associated with university.

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ABSTRACT

Researchers have recognized the importance of systematic liquidity risk, and financial hedging for asset prices. However, an important and yet unanswered question is why some stocks are more exposed to fluctuations in market liquidity than other stocks with similar liquidity and characteristics. Promising market-place hedge-funds have been evaluated as one amongst many approaches in hedge-fund efficacy measurement discourse. Nonetheless, all these writers do not investigate these funds in element or strive to extort the chief distinctions among these funds and other hedge funds.

Table of Contents

ACKNOWLEDGEMENTi

DECLARATIONii

CHAPTER 01 INTRODUCTION1

Background1

Problem Statement1

Research Questions2

CHAPTER 02 LITERATURE REVIEW3

What is liquidity risk?3

What are the hedge funds?4

Business Risk5

Risks Generating Strategies6

Related Research7

Hedging Model9

Summary of Institutional Ownership10

Empirical Methods10

Measurement of Liquidity Risk11

An Event Study of Liquidity Crises12

CHAPTER 03 METHOLOGY13

Introduction13

Research objective13

Data Collection Method13

Techniques for Finding Data14

CHAPTER 04ANTICIPATED RESULTS AND DISCUSSION15

Anticipated Results15

Discussion16

CHAPTER 05 CONCLUSION AND RECOMMENDATION17

Conclusion17

Recommendation18

References20

APPENDIX23

Comparison growth of hedge funds and mutual funds23

Investment style of hedge funds23

Questionnaire for Hedge Fund Investors24

Related Diagrams25

CHAPTER 01 INTRODUCTION

“Some hedge fund managers are coming under increased pressure to liquidate their positions as banks ask for more collateral to back funds'. Many investors and regulators worry whether a broad hedge-fund deleveraging will create more risk for the overall financial system.” “Hedge funds are selling billions of dollars of securities to meet demands for cash from their investors and their lenders, contributing to stock market's nearly 10% drop over the past two days.”

Background

In economic boom, the degree of optimism usually increases the mind to invest, and reduces the perceived risk and increasing accordingly exposure to it, producing a stronger inverse effect in the case when change cycle exacerbating the pessimism of the agents. For alternative investments such as Hedge Funds increase should increase the con- conformity and knowledge of individuals regarding the use of these instruments investment portfolios. In this research will be focusing on hedge funds and their validity. How attractive are, and for which reasons recently they have been so attractive to many investors. What are the risks that we facing in every day trading with hedge funds and how this can be avoid in future investments, or if it is possible to control the risk that they facing.

Problem Statement

The financial markets turmoil in 2008 and 2009 has intensified the debate over the impact of institutional ownership on systematic liquidity risk. Policy makers, practitioners, and academic researchers have expressed concerns that institutional selling could increase the exposure of assets held by institutional investors to systematic liquidity shocks, and create more ...