Question

1. You found a public database for hedge fund returns and are eager to do some data analyses on hedge funds in general using the database. Your colleague found out that the hedge funds in the database were under no pressure to report their performance to anyone outside the funds. Based on her finding, she argues that the returns in the public data are likely to be biased upward. Would you agree? Why or why not? Briefly explain.

Answer 1

Answer:

Truly, I will concur or agree that returns for hedge investments are not sufficiently reflected on the grounds that those hedge funds returns are one-sided or biased upwards in light of the fact that they are not in synchronization with the market pace of return regarding the unpredictability in light of the fact that these returns are constantly blamed for being contrarily skewed.

The returns of hedge funds are for the most part not acting in accordance with the benchmark record in recent decades when it is being balanced for the instability of the list and by and large these returns are attempting to reflect that hedge investments are performing better than the general index however hedge investments are for the most part not performing superior to Index, when it is balanced for the unpredictability of the index since hedge fund are commonly less unstable or volatile when it is contrasted with the general instability of the index.

Efficient pace of return isn't followed while reporting of these hedge investments returns since they are not changing in with the arrival of the unpredictability so these are by and large described by creating a uniform rate of return however they are additionally described by producing extreme misfortunes which can dispose of each one of those little gains.

In this way, The Hedge fund returns are contrarily skewed and hedge funds are under no strain to report their presentation as indicated by the standard set, so their exhibition in the public area are altered in like manner and manipulated through non disclosure prerequisites according to the accommodation of these hedge fund or investments so as to reflect the preformance of the Hedge subsidize as superior to performance of the general market. In this way, it very well may be said that the hedge fund returns are not reflecting the appropriate execution of The Hedge funds as they are contrarily skewed and they are not in accordance with the instability and they are effectively manipulated by the comfort of these fund directors to reflect their out performance while being contrasted with the market.