August 29, 2006

Questions You Should Answer

When you consider investing in hedge funds, you should have some general risk questions that will determine the course of your action. The following are good general risk questions to start a hedge fund:

How do you insure the separation of front and back office?
Do you have written policies and procedures?
How do you manage risks?
Do you have a designated risk manager?
Do you include risk limits in your guidelines?
What are your backup and recovery plans?
How do you define leverage?
What is the type of your borrowing - long term or short term?
What is your attitude towards transparency?

Read our previous post titled "Risk Arbitrage on Hedge Funds" for information about Risk Arbitrage.

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