1. A critic recently claimed that hedge funds cause market volatility to increase when they publicize (and document) that a public corporation exaggerated its earnings. The critic argued that hedge funds should not be allowed to make such public statements, and should not be allowed to take short positions that bet against the firm that is being criticized. Write a short essay that supports or refutes this opinion.

2. Should large securities firms be allowed to be independent and insulated from bank regulation, or should they be required to register as bank holding companies, and therefore be subject to bank regulations? Write a short essay that supports your opinion.

Answer preview

I support the position that the hedge fund should not be allowed to make public statements or take short positions against a public corporation. Hedge funds have reached a high status in the securities industry and they have inspired feelings of admiration, fascination and have been trusted by many as a source of great investment (Kokkonen & Suominen, 2015). Every major and known newspaper publishes news on the hedge fund almost on the daily or weekly basis. The hedge fund, which is a private pool of capital which is formed as either a limited partnership or limited company where investments are made using a hedging strategy against equity, has played a big role in public markets. Hedge funds do not reveal their performance, they mainly sell short or buy long and they are very aggressive in the marketplace, where they take very strong positions and move money so quickly.(1005words)