Securitization is a method that encompasses the pooling and transferring of the ownership of assets that generate cash flow, such as loans or receivables, to a special legal entity. This entity then offers securities, which are underpinned by these assets,…

Custom Fee Arrangements Hedge fund fees are often split into management and incentive fees. For example, a “2 and 20” fee structure implies that a fund manager charges an investor a 2% management fee based on the asset under management…

Macro risk originates from political, economic, legal, and other institutional factors in an economy, country, or region. As such, some of the factors that catalyze macro-risk include exchange rates, political instability, and gaps in legal or financial structure. Business risks…

A variable \(X\) is said to have a lognormal distribution if \(Y = ln(X)\) is normally distributed, where “ln” denotes the natural logarithm. In other words, when the logarithms of values form a normal distribution, we say that the original…