*Official Alternative Investment Discussion Thread*

Three methods to calculate capitalition rate
1. Market extraction method
2. Band of investment method
3. Buildup method
Two Methods to calulate Market Value
1. Direct Income Capitalization
2. Gross Income Multipler
BTW on the GIM:
MV = gross income x gross income multiplier
where (gross income multiplier - sales price/ gross income)
Couldn’t they just do (MV = Sales Price)….jeez.
 
Which of the following most accurately describes the distribution of hedge fund returns? Hedge fund returns:
A) are normally distributed.
B) are lognormally distributed.
C) have a platykurtic distribution.
D) have fat tails in the distribution.
 
I have no idea, but I believe stock price returns are lognormally distributed, so I’ll go with that.
B
 
Damn I spoil you AF.
Which of the following is most accurate in describing the betas of emerging market arbitrage hedge funds? These funds have:
A) high betas in up markets and low betas in down markets.
B) low betas in up markets and positive betas in down markets.
C) low betas in both up and down markets.
D) high betas in both up and down markets.
 
I just pulled this out of my A$$…..
Given the current Credit Crisis and the inability for Hedge Funds to lock in adequate financing terms, which Hedge Fund strategy should be most adversly impacted by this financing crisis?
A) Long / Short Equity
B) Distressed
C) Fixed Income Arb
D) Emerging Markets
 
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