Private exchange funds

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2^#

发表于 2011-7-13 13:54 | 只看该作者

it gives them all the ability to hedge or borrow money against in a bigger/more efficient way

lets say i only had 10 grand of a low basis stock, not much to do something with. but if i find 20 other people with 10 grand of the same one, our 200 grand can give us more flexibility to do a number of different hedging options/borrowings

dyga

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发表于 2011-7-13 13:54 | 只看该作者

SPOILER for the 2007 AM Exam Q2, the provided answer for diversifying a concentrated position was either Equity collar or a Private Exchange Fund and not Public Exchange Fund. Any idea why if you've taken that exam?

More generally, from a diversification perspective why is one preferred over the other (Private vs public) that is.

Thanks

Valores

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发表于 2011-7-13 13:54 | 只看该作者

Wait, what? I thought an exchange fund wasn't 20 people with the same holding, but 20 people with various concentrated holdings pooling their holdings into a more diversified fund.

lcai

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发表于 2011-7-13 13:55 | 只看该作者

I think that is Public exchange fund Swanny.

bboo

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发表于 2011-7-13 13:55 | 只看该作者

So in a private exchange fund everyone is contributing the same holding?

aidebaobao

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发表于 2011-7-13 13:55 | 只看该作者

Yeah, I think. Just like economy of scale thing to hedge and monetize the position.

pennyless

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发表于 2011-7-13 13:55 | 只看该作者

mwvt9 could you please comment on why the 2007 AM guideline answer is specific about Private Exchange Fund vs. Public Exchange if you have seen/done that question?

I am still not clear on why one is better than the other from a diversification perspective.

Thanks

Edited 1 time(s). Last edit at Monday, May 18, 2009 at 08:44PM by passthismofo.

IAmNeil

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发表于 2011-7-13 13:55 | 只看该作者

i remember a really terrible question about collars vs. exchange fund vs. completeness fund etc...

the answer seems really underwhelming.

thommo77

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10^#

发表于 2011-7-13 13:55 | 只看该作者

passthismofo Wrote:
-------------------------------------------------------
> mwvt9 could you please comment on why the 2007 AM
> guideline answer is specific about Private
> Exchange Fund vs. Public Exchange if you have
> seen/done that question?
>
> I am still not clear on why one is better than the
> other from a diversification perspective.
>
> Thanks

I haven't taken this exam, so I can't comment.