Some hedge funds refer to their strategies as "riskarbitrage strategies." What does that mean?

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A risk arbitrage strategy involves transaction-specific investigationthat desires to profit by obtaining securities which are discounted from the value to be paid for them such as in a planned merger or acquisition due to the uncertainty of the timing and completion of the transaction. The snagis in analyzing the risk of postponement or non-completion and deciding when it is best to take a position in order to achieve profits. The position can be taken anywhere from the start of a plannedtransaction to its conclusion. Risk/merger arbitrage portfolio managers typically seek speculative profits from the purchase of shares in forecasted acquisition targets, while maintaining defensive positions through hedges in acquiring companies and disciplined risk management.

Hedge fund managers believe the misalignment will generate a profit with little risk andtoo often refer to such a strategy as a "risk arbitrage strategy." This is an unfortunate mislabelingof a convergence trading strategy because an arbitrage strategy indicates that there is no risk.

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a. True b. False Indicate whether the statement is true or false

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________ in the marketplace are a rough measure of how society values particular goods and services.

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Parsons Company has a cash flow problem. The company owes its suppliers $300,000 on credit

terms of 2/10 net 40, but Parsons doesn't have the cash to pay during the discount period. Parsons, however, can borrow the $300,000 at annual rate of 24%. Should Parsons borrow the money to pay its accounts payable? A) Yes, the effective cost of forgoing the discount is greater than 24%. B) No, the effective cost of forgoing the discount is equal to 24%, and there are transactions costs associated with borrowing. C) No, additional borrowing will cost more for interest ($60,000 per year) than the discount is worth. D) It doesn't matter because the present value of the cost of borrowing is exactly equal to the amount of the discount for paying within 10 days.

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The most common bases for departmentalization are by function, by product, by location, and by customer.

Answer the following statement true (T) or false (F)

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