Financial Risk Manager Part 2
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A due diligence specialist at an asset management firm is evaluating the risk management process of a hedge fund in which the firm is considering making an investment. Which of the following statements best describes appropriate criteria the specialist should use for such an evaluation?
A
The firm should ensure that the hedge fund allows direct, in-person communications with the fund's senior management or key decision makers at the fund.
B
Today's best practices in risk management require that a fund employ independent risk service providers and that these service providers play important roles in risk-related decisions.
C
When considering investing in a leveraged fund, the company should not invest 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 in general if more than 10% of asset prices are based on model prices or broker quotes, the specialist should recommend against investment in the fund.