Financial Risk Manager Part 2
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Ultimate access to all questions.
When assessing the risk management process of a potential hedge fund investment, what specific criteria should a due diligence specialist at an asset management firm deem suitable for their evaluation?
A
The firm should ensure that the hedge fund allows direct, in-person communications with the fund's senior management and key decision makers.
B
Following today's best practices, the fund should employ independent service providers that will play essential roles in managing and monitoring its risks.
C
Leverage is a key criterion and the firm should not consider investing in the fund unless the fund's gross leverage ratio is above the peer group average.
D
It is crucial to assess the fund's valuation policy, and if more than 10% of asset prices are marked to model, rather than marked to market, the firm should not invest in the fund.