Used to approximate hedge fund returns

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Which of the following is a technique that could be used to approximate a hedge fund returns?

a) buying calls with borrowed money; b) shorting stocks and using the proceeds to buy bonds; c) write naked monthly calls and invest in stock; d) write naked monthly puts and invest the money in treasuries

Calculating the price of a bond by discounting future expected cash flows by the current yield-to-maturity does not make which of the following implicit assumptions?

a) that the yield curve is always upward sloping; b) that the risk of the bond does not change; c) that the yield curve does not change in slope; d) that the yield curve does not change in level.

Given the following information what is the expected one year rate in year three? A current three year U.S. treasury has a YTM of 2.8%, currently four year U.S. treasuries have a YTM of 3.2%.

a) 3.25%; b) 3.85%; c) 4.22%; d) 4.41%

Reference no: EM131560965

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