Question 1 (15 marks): You are a hedge fund manager employing a team of scientists to read academic journals and patent applications to detect and report on the next big advancement in battery (energy storage) technology.

Your scientist colleagues believe that a small university team of Japanese engineers has discovered and lodged a patent for a break-through new battery technology that can store double the energy, weighs half as much and is far safer than the current leading Lithium-ion batteries. However, it requires significant amounts of the rare earth metal element Neodymium (Nd) to manufacture. The new battery is called the NeoCell. Once the supply of Neodymium increases, the NeoCell is expected to cost half as much as Lithium-ion batteries to manufacture and will totally replace Lithium-ion (Li) batteries in phones and electric cars.

This information was just learned from the Japanese universitys patent application which was lodged a moment ago on the Japanese governments patent office website. You dont believe that other traders will read this information or realise its consequences for 24 hours.

State the trades you would make in specific securities or instruments and describe how you expect them to make profits. Question 2 (15 marks): Should investors that take on significant leverage expect higher returns on their equity? Use the concepts and readings discussed in the course to answer this question.

Question 3 (15 marks): Comment on how 3 of the below articles might help you better manage risk if you worked in a hedge fund or private equity fund. Use sub-headings to clearly indicate which 3 articles you are covering.

2013 Frazzini,Kabiller,Pedersen Buffetts Alpha

1992 Minsky Financial Instability Hypothesis

2017 Slater Why duration is the least understood word in finance

2020 Toda Susceptible-Infected-Recovered (SIR) Dynamics of COVID-19 and Economic Impact_Read from Page10-Model to end

1997 Shleifer, Vishny The Limits Of Arbitrage

1959 Latane Criteria for choice among risky ventures

2010 Peters Optimal leverage from non-ergodicity

2002 Jacquier,Kain,Marcus Optimal Forecasts of Long-Term Returns Geometric, Arithmetic, or Other Means