Classifying some of the largest hedge funds as Tier 1 financial holding companies would subject these funds to requirements regarding capital, liquidity, and risk management. The rationale for this is that a large hedge fund, on its own, could pose systemic risk to the financial system. Discuss the merits of this argument.
Answer to relevant QuestionsWhat is the benefit of a hedge fund like Citadel expanding into a hedge fund services business such as market making and fund administration?Why would a proposal to eliminate the tax benefits of carried interest (performance fees) have a greater impact on the private equity industry?What are the three ways to create returns through an LBO transaction?Describe the three main areas where private equity investments may bring value to corporations.Why were LBO funds so successful from 2002 through July 2007? Describe what has happened since then.
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