Pine Street Capital

FIN 421 Security analysis and Portfolio Management F12 Case Study scourge Street Capital HBS 9-201-071 Instructions for Classroom Discussion Thursday, November 29, 2012 Description A technology wangle recollection is trying to conclude whether and/or how to turn dour equity market adventure. Its outwit choices are short-selling and options. The fund has honorable gone through one of the equitable about vaporizable periods in NASDAQs history, it is trying to decide whether it should wear out on its fortune management political platform of short-selling the NASDAQ index or shimmy to a hedging program utilizing regularise options on the index. Objectives To introduce students to the utilization of equity derivatives in the context of use of money management, particularly the expend of delta-hedging operate options. Also, to learn about how and why bump management decisions are actualise in a mere(a) levered hedge fund. 1 Suggested Assignment Questions 1. What is a hedge fund? How do hedge funds dissent from mutual funds? i. outsmart funds are non publically owned and are slight regulated. This affords them additional immunity for take a chance management and investment strategies to potentially generate large returns than a archetype mutual fund. They are in any case able to use supplement to generate a larger ROE and hedge investments by shorting and using options strategies.

2. What risks does PSC essential to hedge and what risks is PSC automatic to bear? why? How would you hedge these risks on July 26 using a short-selling outline? What problems arise with the short- barter strategy? i. They want to hedge market risk moreover are willing to bear firm precise risk because they feel they have complete knowledge to pull off firm risk but are less trustworthy about managing the entire markets risk. They took this position because they felt confident in their ability to pick confirmative alpha stocks. 1. Graph testify 9 short sale strategy ii. The main problem with short-selling is that with a leveraged portfolio and a highly volatile market, the possibility...If you want to get a full essay, order it on our website: Ordercustompaper.com

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