We have witnessed the Asian financial crisis, the collapse of LTCM, the
subprime mortgage crisis and the credit crunch - all in a little more
than a decade. Hedge funds have had a ineligible role in each of these
crises, but what was this role exactly? Some accuse them as the director
of financial crises; some see them as merely an actor playing the role
assigned by the market. This study concludes that some hedge funds are
actually spontaneous threats. These are hedge funds that combine the use
of arbitrage strategies and complex mathematical models while possessing
an extremely large pool of capital. Such hedge funds are destined to
fail and their failures are destined to generate systematic collapse.
The set of hedge fund risks brings more uncertainties as they interact
with vulnerabilities embedded within the global economy. This study
strives to cover what seems to be a missing page in the discipline of
finance, which is qualitative analyses that examine what happen when
different risk and vulnerability variables interact. The book is
recommended for investment professionals and students with a serious
interest in global finance.