Hedge funds: An investment partnership that marries a fund manager, which can often be known as the general partner, and the investors in the hedge fund, sometimes known as the limited partners.Financial assets: An intangible asset whose value is derived from a contractual claim, such as bank deposits, bonds, and stocks.Equities: Ownership or proprietary rights and interests in a company – synonymous with common stock.The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification: A risk management technique that mixes a wide variety of investments within a portfolio.Currency risk: A form of risk that arises from the change in price of one currency against another.Correlation: A statistical measure of how two securities, such as equities, bonds, commodities, move in relation to each other.Carry trade: The cost of financing positions the rate of interest earned from the securities held less the cost of funds borrowed to purchase them.Bonds are interest bearing and promise to pay the holder a specified sum of money at its maturity plus interest at given intervals. Bonds: An instrument of debt issued by a corporation or government to raise capital.Bank for International Settlements: Headquartered in Basel, Switzerland, it serves as a bank for central banks to foster international monetary and financial cooperation.
Asset managers: Financial services companies that invest on behalf of its clients.The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents (money market instruments). Asset class: A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations.
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