Study Notes: Constantinides, Chapter 17: Hedge Funds

Constantinides, Handbook of the Economics of Finance Study Notes contains 18 pages covering the following learning objectives:

The characteristics of hedge funds and the hedge fund industry, and compare hedge funds with mutual funds.
Biases which are commonly found in databases of hedge funds.
The evolution of the hedge fund industry and landmark events which precipitated major changes in the development of the industry.
Evaluating the role of investors in shaping the hedge fund industry.
The relationship between risk and alpha in hedge funds.
Different hedge fund strategies, describe their return characteristics, and the inherent risks of each strategy.
The historical performance trend of hedge funds compared to equity indices.
The market events which resulted in a convergence of risk factors for different hedge fund strategies, and the impact of such a convergence on portfolio diversification strategies.
The problem of risk sharing asymmetry between principals and agents in the hedge fund industry.
The impact of institutional investors on the hedge fund industry and assessing reasons for the growing concentration of assets under management (AUM) in the industry.

After reviewing the notes you will be able to apply what you learned with practice questions.

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