Chapter 1

Introduction

1.1 What Are Hedge Funds?

It is not an easy task to come up with a precise and succinct definition for the term “hedge fund.” The hedge fund world is an ever-changing one, and this is a major reason why there is no exact and universally accepted legal definition for hedge funds. One can say that they are private pools of capital in the sense that ownership claims in a hedge fund are not traded in organized exchanges, and fund investors benefit from appreciations in the market value of a hedge fund’s asset portfolio. It is well known that hedge funds present investment opportunities which provide risk and return ...

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