Long-Term Capital Management (LTCM) Definition.

LTCM was a hedge fund that collapsed in 1998 after sustaining massive losses. The fund had made large bets that the spread between different types of bonds would narrow, but when bond yields unexpectedly rose, these bets went sour. LTCM's collapse sent shockwaves through the financial system and led to tighter regulation of hedge funds.

Is strategic long term? Yes, strategic long-term planning is critical for hedge funds. Hedge funds typically have a longer time horizon than other investment vehicles, so it is important for managers to have a clear understanding of their goals and how best to achieve them. A good hedge fund manager will have a clear investment philosophy and strategy that they stick to over the long term, even when market conditions change.

What is long-term capital in financial management?

In financial management, long-term capital refers to investment capital that is not expected to be repaid within the normal operating cycle of a business. This type of capital is typically used to finance the purchase of fixed assets, such as real estate or machinery, that will be used over an extended period of time. Long-term capital is also used to fund research and development projects or to expand a business into new markets.

Hedge funds are one type of financial institution that specializes in investing long-term capital. Hedge funds are not subject to the same regulations as traditional investment firms, and they often use aggressive strategies to achieve high returns. Many hedge funds are only available to accredited investors, meaning that they are not accessible to the general public.

Where do hedge funds get leverage?

There are a number of ways that hedge funds can get leverage. One way is by using margin when trading securities. This allows them to trade with more money than they have on hand by borrowing from their broker. This can increase their profits if the trade goes their way, but can also increase their losses if the trade goes against them.

Another way hedge funds can get leverage is by using derivatives. This can involve buying options or futures contracts, or entering into swaps. These instruments can give the fund exposure to a much larger amount of money than they would have if they were just buying the underlying securities. This can increase their profits if the prices of the securities move in the direction they are expecting, but can also lead to losses if the prices move against them.

Hedge funds can also use leverage by borrowing money from banks or other financial institutions. This can give them the ability to buy more securities than they would otherwise be able to, and can increase their profits if the prices of the securities they buy go up. However, it can also lead to losses if the prices of the securities go down.

Finally, some hedge funds use leverage by investing in other hedge funds. This can give them exposure to a variety of different investments and can increase their profits if the hedge funds they invest in perform well. However, it can also lead to losses if the hedge funds they invest in do not perform well.

What hedge fund means?

A hedge fund is a type of investment fund that pools money from investors and invests in a variety of assets, including stocks, bonds, short-term money market instruments, and commodities. Hedge funds are generally less regulated than mutual funds, and they can engage in more aggressive investment strategies, such as short selling and leverage.

The term "hedge fund" is typically used to refer to a type of alternative investment, but it can also be used more broadly to refer to any type of investment fund. What are the 5 sources of finance? 1. Bank loans
2. Debt financing
3. Equity financing
4. Mezzanine financing
5. Venture capital