You are a hedge fund manager with $100 million in assets. You feel you have bett

ID: 2720161 • Letter: Y

Question

You are a hedge fund manager with $100 million in assets. You feel you have better insight into

the emerging markets than most. You decide to invest all $100 million into a basket of emerging

market stocks. You feel so confident that you borrow another $100 million at a rate of 6%

annually from your prime broker and invest in the same stocks. You decided to hedge some of

the risk and short sold $50 million of the emerging markets index. After 1 year, your stocks

increased by 26% and the index went up by 22%. Calculate your rate of return.

You are a hedge fund manager with $100 million in assets. You feel you have bett

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.