Investment Forms and Vehicles Used in Hedge Fund Investments
Recap: Hedge Funds A hedge fund is typically structured as a private investment partnership. This can be either onshore, like in the United States, or in a tax-advantaged offshore location, such as the Cayman Islands. The offering of the hedge…
Sources of Risk, Return, and Diversification among Hedge Fund Investments
Hedge funds function as investment vehicles designed to minimize market exposure and returns derived from beta, emphasizing the generation of idiosyncratic returns. The primary source of excess return in hedge funds comes from exploiting market inefficiencies, which could be fleeting,…
Financial Applications of Distributed Ledger Technology
Distributed Ledger Technology (DLT) represents a technology with the potential to revolutionize financial services and record-keeping practices. Built upon a distributed ledger, a database that can be shared across an extensive network of entities, DLT networks are being explored to…
Investment Forms and Vehicles Used in Digital Asset Investments
Investments in digital assets can be undertaken either directly on the blockchain or indirectly through exchange-traded products and hedge funds. Direct Investment on the Blockchain Direct investment on the blockchain requires a cryptocurrency wallet. The wallet holds the essential public…
Sources of Risk, Return and Diversification among Digital Asset Investments
The surge in value of digital assets, particularly cryptocurrencies such as Bitcoin and Ethereum, is a pivotal aspect in digital asset investments. These assets have experienced swift value escalations since their inception, especially due to the introduction of more conventional…
Investment Features of Digital Assets and Contrast them with Other Assets Classes
Digital assets have gained considerable importance in the financial services sector, establishing themselves as a novel asset category for investors, with cryptocurrencies primarily driving this surge. Investments in cryptocurrencies are commonly recognized as an alternative asset. As digital assets gain…
Arbitrage Relationship between Spot and Forward Exchange Rates
This section will consider the relationships between spot and forward rates, interest rates, and maturities that exist as a result of arbitrage relationships. Spot and Forward Rates In the professional FX market, forward exchange rates are commonly quoted in terms…
Capital Restrictions
Capital restrictions are the measures that governments or central banks take to control the flow of foreign money in and out of a country’s economy. Objectives of Capital Restrictions Economic Stability and Growth Governments impose capital restrictions to steer their…
Exchange Rate Regimes
An exchange rate regime is the framework a country’s central bank or government employs to determine its currency’s relative value in the international market. This regime influences the country’s trading relationships and capital flows. The chosen regime is based on…
Foreign Exchange Market
The foreign exchange (FX) market is the world’s largest market, with a daily turnover of approximately USD 6.6 trillion in 2019. It operates 24 hours daily, facilitating international trade and cross-border capital flows with participants from various backgrounds. Functions of…
