State and federal Essay Example for Free

State and federal Essay How a society punishes their criminals can say a lot about the way the citizens live their lives. Here in the United States we would rather take better care of someone in prison for life than a person on the street who has never committed a crime in their life. The philosophy and practices has changed drastically in the last 30 years. Rehabilitation was the main focus for the beginning of the 20th century. This gave way to a new found focus on justice, and fairness in the 1970s. Crime control was the next practice of sentencing, this emphasized jail time as a way to reduce the crime in a community. During the 1980s-1990s this model of crime control was very popular. The emphasis on goals of the sentencing, and corrections policies, and practices can be characterized. Sentencing has four major goals that are normally attributed to it: deterrence, incapacitation, rehabilitation, and retribution. Retribution is from the 21 centuries model of â€Å"just deserts.† The main idea is that if someone breaks the law they should be punished. The other three uses more emphasize on protecting the public. The way they go about is how they differ. Deterrence focuses on the burdensome aspect of a punishment. This makes the offender think about what he or she is, has, or is about to do. This is to make a rational thought that the chance of getting caught is too high, not worth the risk. The idea is to make the person (specific deterrence) who may commit the crime so afraid of the punishment, and detour others (general deterrence) from committing the same crime. Incapacitation is when a person is deprived the capacity to commit a crime due to the fact they are, well in prison. Next is rehabilitation. The goal here is to change the way an offender thinks, and acts so that they do not commit crimes any more. This is done by usually offering an education to an offender. When all of this is combined, and put to work it creates a large work load for the corrections departments across the United States. Though not one of these works best for every prison, city, or inmate, but when combined can be a useful tool. The corrections system takes a large blow depending on how a crime or offender is sentenced. With most jails, and prisons near, at, or over capacity they must take each sentence in to consideration. For retribution there can be very little impact on a large scale prison, but for a small town corrections department this can make an impact. When an offender is charged with a crime, and is sentenced with a form for retribution, community service for example. For every person that is sentenced in this way it takes more resources to complete the task for the corrections department. If more offenders were sentenced to probation or parole the impact on the corrections system would be much less. This would defeat the purpose of the system many times. The idea behind the sentence is to get the criminal off the streets, and out of the community. Rehabilitation is considered to be the only punishment that is a combination of the reduction of crime with the offender’s rights intact. Crime can be deterred by long prison terms, and capital punishment, rehabilitation will only work if the offender can re-enter the community or society. If this is not an option extreme punishments need not to be ruled out. If one is to favor a â€Å"right’s oriented rehabilitation,† this is to accept the criminal’s liability to receive punishment, but also assumes the right on his or her part to be able to return to society, and be a contributing member of a community. This idea is often referred to as â€Å"state-obligated rehabilitation.† This meaning that if the right of the state is to punish, they also must be able to educate their prisoners. The idea is that no more harm comes than was intended at the time of the sentence. One can go as far as to say that if the state or federal prison system does not provide a source of rehabilitation to the inmates it would be cruel and unusual punishment. If the goal is to rehabilitate the criminals, and one day have them back on the street as functioning members of a society that we want so badly to be safe, and secure then yes. Prison should be a harsh environment, but at the same time a place where one can gain a new found  appreciation for a hard work ethic or a basis education. Also along with this prison needs to be a place where an offender can look back, and be thankful for the time they spent their because of the education they received, but at the same time never want to return because it is such a horrible place. According to The Free Dictionary (2013), â€Å"Determinate Sentence – A sentence to confinement for a fixed or minimum period that is specified by statute.   Indeterminate Sentence – The prison term imposed after conviction for a crime which does not state a specific period of time or release date, but just a range of time, such as â€Å"five-to-ten years.† My personal opinion is that indeterminate sentencing is a more appropriate approach to sentencing. For one there are so many variables that can go into a case that if a cookie cutter approach is tried to be used there will be several things over looked, and then many things over emphasized. The idea for a punishment to be passed down that is fair to the individual not the crime. Though I believe that some crimes should have a determinate sentence to them with an option of adjustment depending of the situation, but for the most part if someone breaks that law, no matter who, what, why, where, or when they get the same sentence. An example According to OMally Law Office (2013), †A man convicted of sexual assault on his maid had his sentence reduced from 28 years to life, to 8 years to life in an Arapahoe County, Colorado court recently. This story was reported in a CBS Denver 4 News release. Homaida Al-Turki, a Saudi-Arabia citizen, was accused and convicted on 12 counts of sexual assault related to keeping his maid as a sex slave in his Aurora, Colorado home. The reduction in sentence was said to be ordered because Mr. Al-Turki, who was incarcerated at a Limon, Colorado facility for the past five years, displayed good behavior, and also due implications from a recent Colorado Supreme Court ruling in a case unrelated to Mr. Al-Turki. It is important to note that Mr. Al-Turki still faces an indeterminate sentence. Indeterminate sentencing in Colorado means that a defendant may be kept for  his entire life, regardless of his minimum sentence. So, the practice effect is that if the parole board desires to keep Mr. Al-Turki in the custody of the Colorado Department of Corrections forever, they can. In effect, the sentence reduction only impacts the minimum sentence this defendant must serve, not the maximum. Indeterminate sentences in Colorado only come into play with Colorado sex offenses. Whether it is Douglas County, Weld County, Larimer County or another Colorado County, indeterminate sentences are devastating.†

Not Everyone Can Be a Servant Leader Essay -- Servant Leadership

There are ten characteristics of a servant leader: listening (communication between leaders and followers as an interactive process that includes sending and receiving messages), empathy (â€Å"standing in the shoes† of another person and seeing the world from their point of view), healing (to make whole by caring about the well-being of their followers), awareness (being acutely attuned and receptive to physical, social and political environments), persuasion (clear and persistent communication that convinces someone to change), conceptualization (ability to be a visionary for an organization and providing a clear sense of its goals and direction), foresight (ability to know the future and predict what is coming based on what is happening now and what has occurred in the past), stewardship (taking responsibility for the leadership role and accepting responsibility to carefully mange the people and organization), commitment to the growth of people (helping each person grow per sonally and professionally), and building community (fostering the development of the community), (Spears, 2002 as cited in Northouse 2013). I think that most people are probably capable to be servant leaders; however, I do not agree that everyone can learn to be a servant leader or even desire to be a servant leader. A servant leader as stated above has to have certain characteristics. Not everyone has all of these characteristics nor do I think these characteristics can be learned. It seems to me, either you have them or you don’t. If you don’t have all these characteristics, it would seem to me that servant leadership wouldn’t be as effective and therefore, would have greater chance of failure on both the leader and the follower. For example, some people sim... ...ply don’t want to put forth such a tremendous amount of behavior that is required to be a servant leader. I think that if the right type of individual is selected, servant leadership can produce very good results not only for the leader, but also the follower and ultimately the organization. As Norhouse (2013), explains, servant leadership has been used in a variety of organizations including Starbucks, AT&T, Southwest and more. It has also been taught at many colleges and universities as well. I think that with the right individual and the right training, it is a very successful type of leadership; however, I still don’t agree that everyone can learn to be a servant leader. References: Northouse, P.G. (2013). Servant Leadership. In L.C. Shaw & P. Quinlin (Eds.), Leadership theory and practice (6th ed.) (pp.219-252). Thousand Oaks, CA: Sage Publications, Inc.

Student Life

Your exam will be multiple choice Exam # 1 Introductory Chemistry Be sure to show your set up for all mathematical problems. Your answers must have the correct number of significant digits and the correct units. I. Chemistry is a quantitative science therefore we must make measurements. All measurements have an uncertainty that we need to be aware of in our calculations. A. We need to be able to determine the number of significant figures in a measurement. For the following measurement state the number of significant figures. (4pts) 1. 1. 000 cm 2. 2. 590 x 10-5 m 4 3. . 020 g 4. 1000 cm 2 1 B. We need to be able to add, subtract, multiply, and divide with measurements. Solve the following problems. (4 pts) 1. 3. 02 cm + 5 cm + 0. 002 cm = 8 cm 3. 2. 0 cm x 2. 00 cm x 2. 000 cm = 8. 0 cm3 2. 5. 35 g – 0. 005 g = 5. 35 g 4. 7. 89 g / 5. 2 mL = 1. 5 g/mL B. It is often necessary to convert from one unit to another. This is easily accomplished with the right unit factor. Solve th e following problems. 1. During the last six lunar landings 842 pounds of Moon samples have been collected. What is this mass expressed in kilograms? ( 2. pounds = 1 kilograms) (4 pts) 842 lbs x 1 kg / 2. 2 lbs = 382. 7272727 kg = 380 kg 2. If a 250 mL beaker weighs 95. 4 g, what is the mass in kilograms? (4 pts) 95. 4 g x 1kg / 1000g = 0. 0954 kg = 9. 54 x 10-3 kg 3. If the radius of an oxygen atom is 6. 6 x 10 (5 pts) 6. 6 x 10 –10 dm x 1 m / 10 dm x 109 nm/ 1 m = 6. 6 x 10-2 nm -10 dm, what is the radius in nm? 1 C. Chemists often deal with percent problems. As long as you remember that percent refers to per 100, these problems can be solved. 1. A penny minted after 1982 is composed of copper and zinc only. If a penny has a mass of 2. 07 g and is 2. 50 % copper. What is the mass of zinc in the coin? (5 pts) 2. 507 g x 2. 50/100 = 0. 062675 g of Cu 2. 507 g of penny – 0. 062675 g of Cu = 2. 444325 g = 2. 444 g of Zn (2. 44 g of Zn is correct also) D. Density is a ver y important concept for chemist. The density of a substance can be obtained in a chemistry laboratory. 1. A rubber stopper with a mass of 23. 75 g is dropped in a 50-mL graduated cylinder that has 20. 4 mL of water. After the stopper is dropped in the graduated cylinder, the water level rises to 24. 7 mL. What is the density of the rubber stopper? 5 pts) 2. 375 g / (24. 7 mL – 20. 4 mL) = 5. 523255814 g / mL = 5. 52 g / mL (5. 5 g /mL is accepted) We can make predictions if the density is known. 2. A glass cylinder contains four liquid layers: mercury (d = 13. 6 g/mL), chloroform (d = 1. 49 g/mL), water (d = 1. 00 g/mL), ether (d = 0. 708 g/mL). If a piece of ice (d = 0. 917 g/mL) is dropped into the cylinder, where does it come to rest? Why? (5 pts) The mercury layer will be on the bottom, then the chloroform, then the water, and finally the ether. The ice will sink in the ether layer and float on top of the water layer. If the density is know, we can we can find the mass of a given volume or the volume of a given mass. 3. The density of aluminum is 2. 70 g/mL. What volume will 250 g of Al occupy? What is the mass of a piece of aluminum with a volume of 250 mL? (6 pts) 250 g of Al x 1 mL / 2. 70 g = 92. 59259259 mL = 93 mL 250 mL of Al x 2. 70 g / 1 mL = 675 g = 680 g 2 Using the density value we can indirectly obtain distances that are too small to measure directly. 4. A sample of aluminum foil has a length of 10. 0 cm and a width of 5. 7 cm. If the aluminum foil weighs 0. 234 g, what is the thickness of the aluminum foil? Remember that the density of aluminum is 2. 70 g/mL. (6 pts) Volume of Al = length x width x thickness = mass / density 0. 234 g x 1 mL / 2. 70 g = 0. 0866666666 mL 0. 086666666 mL / 10. 0 cm x 5. 7 cm = 0. 001520467 cm = 1. 5 x 10 –3 cm E. Heat and temperature are two very important concepts. 1. In your own words, please state the difference between heat and temperature. What is a common unit of each? (5 pts) Heat measures the total energy of a sample and temperature measure the intensity of heat or the average heat of a sample. A common unit of heat is a calorie and a common unit of temperature is Kelvin. It is important to be able to convert from one temperature unit to another. 2. Aluminum melts at 1220 F. (You can see why aluminum is not a liquid at room temperature) What is the melting point of aluminum in degree Celsius ( C) and in Kelvin o C (6 pts) (K)? (oF – 32 oF) x 100 oC = 180 oF (1220 oF – 32)(100 / 180) = 660 oC 660 oC + 273 = 933 K o o 3. Give the ions present and their relative numbers in potassium sulfate. a) b) c) d) e) 1K+ and 1 SO42K+ and 1 SO321K+ and 2 SO422K+ and 1 SO423K+ and 1 SO43- 3 4. How many cm2 are in an area of 4. 21in2? a. b. c. d. e. 10. 7 cm2 114 cm2 27. cm2 1. 66 cm2 1. 14 cm2 5. In performing a multistep calculation, when should you round off the answer in the calculator display? (5 pts) In a multistep calculation you should round off the answer at the end of the calculation E. Matter and Energy. 1. We learned four terms in chapter 4, heterogeneous mixture, homogeneous mixture, compound, and element. Please an example of each. (8 pts) An example of a heterogeneous mixture is the earth’s crust. A heterogeneous mixture can be separated into pure substances by physical methods. An example of a homogeneous mixture is salt water. The properties of a homogeneous mixture constant for a given sample. An example of a compound is NaCl. A compound can be broken down into elements by ordinary chemical reactions. An example of an element is Na. An element is a substance that can not be broken down further by a chemical reaction. 2. Match Symbols and Names (10 pts) 1. sodium 2. iron 3. carbon 4. nitrogen 5. phosphorous d c e b a a. P b. N c. Fe d. Na e. C 4 1. Cl 2. Ce 3. Cu 4. Co 5. Ca e c b d a a. Calcium b. Copper c. Cesium d. Cobalt e. Chlorine 3. Give an example for each of the following terms: (8 pts) a. hysical property – Appearance, melting point, boiling point, density, heat and electrical conductivity, solubility, and physical state under normal conditions are all examples of physical properties. b. chemical property – A chemical property of a substance describes its chemical reactions with other substances. The chemical property of sodium states that sodium will react with water to form hydrog en gas. c. physical change – A physical change include changing shape, volume, or physical state. For example when water changes to ice. d. chemical change – A chemical change always involves the formation of a new substance. Gas bubbles from the reaction of calcium with water. Fill in the blanks of the following table Symbol number of protons number of neutrons number of electrons mass number 37 Cl17 20 18 48 Cr3+ 24 24 21 24 Mg 12 12 12 37 48 24 Might not be on test. Ask teacher. Chlorine has two stable isotopes with masses of 34. 97 amu and 36. 97 amu. What is the relative abundance of the two isotopes? a. b. c. d. e. 50. 00% 35Cl and 50. 00 % 37Cl 35. 45% 35Cl and 64. 55 % 37Cl 64. 55% 35Cl and 35. 45% 37Cl 24. 23% 35Cl and 75. 77 % 37Cl 75. 77 % 35Cl and 24. 23 % 37Cl 5 Student Life Your exam will be multiple choice Exam # 1 Introductory Chemistry Be sure to show your set up for all mathematical problems. Your answers must have the correct number of significant digits and the correct units. I. Chemistry is a quantitative science therefore we must make measurements. All measurements have an uncertainty that we need to be aware of in our calculations. A. We need to be able to determine the number of significant figures in a measurement. For the following measurement state the number of significant figures. (4pts) 1. 1. 000 cm 2. 2. 590 x 10-5 m 4 3. . 020 g 4. 1000 cm 2 1 B. We need to be able to add, subtract, multiply, and divide with measurements. Solve the following problems. (4 pts) 1. 3. 02 cm + 5 cm + 0. 002 cm = 8 cm 3. 2. 0 cm x 2. 00 cm x 2. 000 cm = 8. 0 cm3 2. 5. 35 g – 0. 005 g = 5. 35 g 4. 7. 89 g / 5. 2 mL = 1. 5 g/mL B. It is often necessary to convert from one unit to another. This is easily accomplished with the right unit factor. Solve th e following problems. 1. During the last six lunar landings 842 pounds of Moon samples have been collected. What is this mass expressed in kilograms? ( 2. pounds = 1 kilograms) (4 pts) 842 lbs x 1 kg / 2. 2 lbs = 382. 7272727 kg = 380 kg 2. If a 250 mL beaker weighs 95. 4 g, what is the mass in kilograms? (4 pts) 95. 4 g x 1kg / 1000g = 0. 0954 kg = 9. 54 x 10-3 kg 3. If the radius of an oxygen atom is 6. 6 x 10 (5 pts) 6. 6 x 10 –10 dm x 1 m / 10 dm x 109 nm/ 1 m = 6. 6 x 10-2 nm -10 dm, what is the radius in nm? 1 C. Chemists often deal with percent problems. As long as you remember that percent refers to per 100, these problems can be solved. 1. A penny minted after 1982 is composed of copper and zinc only. If a penny has a mass of 2. 07 g and is 2. 50 % copper. What is the mass of zinc in the coin? (5 pts) 2. 507 g x 2. 50/100 = 0. 062675 g of Cu 2. 507 g of penny – 0. 062675 g of Cu = 2. 444325 g = 2. 444 g of Zn (2. 44 g of Zn is correct also) D. Density is a ver y important concept for chemist. The density of a substance can be obtained in a chemistry laboratory. 1. A rubber stopper with a mass of 23. 75 g is dropped in a 50-mL graduated cylinder that has 20. 4 mL of water. After the stopper is dropped in the graduated cylinder, the water level rises to 24. 7 mL. What is the density of the rubber stopper? 5 pts) 2. 375 g / (24. 7 mL – 20. 4 mL) = 5. 523255814 g / mL = 5. 52 g / mL (5. 5 g /mL is accepted) We can make predictions if the density is known. 2. A glass cylinder contains four liquid layers: mercury (d = 13. 6 g/mL), chloroform (d = 1. 49 g/mL), water (d = 1. 00 g/mL), ether (d = 0. 708 g/mL). If a piece of ice (d = 0. 917 g/mL) is dropped into the cylinder, where does it come to rest? Why? (5 pts) The mercury layer will be on the bottom, then the chloroform, then the water, and finally the ether. The ice will sink in the ether layer and float on top of the water layer. If the density is know, we can we can find the mass of a given volume or the volume of a given mass. 3. The density of aluminum is 2. 70 g/mL. What volume will 250 g of Al occupy? What is the mass of a piece of aluminum with a volume of 250 mL? (6 pts) 250 g of Al x 1 mL / 2. 70 g = 92. 59259259 mL = 93 mL 250 mL of Al x 2. 70 g / 1 mL = 675 g = 680 g 2 Using the density value we can indirectly obtain distances that are too small to measure directly. 4. A sample of aluminum foil has a length of 10. 0 cm and a width of 5. 7 cm. If the aluminum foil weighs 0. 234 g, what is the thickness of the aluminum foil? Remember that the density of aluminum is 2. 70 g/mL. (6 pts) Volume of Al = length x width x thickness = mass / density 0. 234 g x 1 mL / 2. 70 g = 0. 0866666666 mL 0. 086666666 mL / 10. 0 cm x 5. 7 cm = 0. 001520467 cm = 1. 5 x 10 –3 cm E. Heat and temperature are two very important concepts. 1. In your own words, please state the difference between heat and temperature. What is a common unit of each? (5 pts) Heat measures the total energy of a sample and temperature measure the intensity of heat or the average heat of a sample. A common unit of heat is a calorie and a common unit of temperature is Kelvin. It is important to be able to convert from one temperature unit to another. 2. Aluminum melts at 1220 F. (You can see why aluminum is not a liquid at room temperature) What is the melting point of aluminum in degree Celsius ( C) and in Kelvin o C (6 pts) (K)? (oF – 32 oF) x 100 oC = 180 oF (1220 oF – 32)(100 / 180) = 660 oC 660 oC + 273 = 933 K o o 3. Give the ions present and their relative numbers in potassium sulfate. a) b) c) d) e) 1K+ and 1 SO42K+ and 1 SO321K+ and 2 SO422K+ and 1 SO423K+ and 1 SO43- 3 4. How many cm2 are in an area of 4. 21in2? a. b. c. d. e. 10. 7 cm2 114 cm2 27. cm2 1. 66 cm2 1. 14 cm2 5. In performing a multistep calculation, when should you round off the answer in the calculator display? (5 pts) In a multistep calculation you should round off the answer at the end of the calculation E. Matter and Energy. 1. We learned four terms in chapter 4, heterogeneous mixture, homogeneous mixture, compound, and element. Please an example of each. (8 pts) An example of a heterogeneous mixture is the earth’s crust. A heterogeneous mixture can be separated into pure substances by physical methods. An example of a homogeneous mixture is salt water. The properties of a homogeneous mixture constant for a given sample. An example of a compound is NaCl. A compound can be broken down into elements by ordinary chemical reactions. An example of an element is Na. An element is a substance that can not be broken down further by a chemical reaction. 2. Match Symbols and Names (10 pts) 1. sodium 2. iron 3. carbon 4. nitrogen 5. phosphorous d c e b a a. P b. N c. Fe d. Na e. C 4 1. Cl 2. Ce 3. Cu 4. Co 5. Ca e c b d a a. Calcium b. Copper c. Cesium d. Cobalt e. Chlorine 3. Give an example for each of the following terms: (8 pts) a. hysical property – Appearance, melting point, boiling point, density, heat and electrical conductivity, solubility, and physical state under normal conditions are all examples of physical properties. b. chemical property – A chemical property of a substance describes its chemical reactions with other substances. The chemical property of sodium states that sodium will react with water to form hydrog en gas. c. physical change – A physical change include changing shape, volume, or physical state. For example when water changes to ice. d. chemical change – A chemical change always involves the formation of a new substance. Gas bubbles from the reaction of calcium with water. Fill in the blanks of the following table Symbol number of protons number of neutrons number of electrons mass number 37 Cl17 20 18 48 Cr3+ 24 24 21 24 Mg 12 12 12 37 48 24 Might not be on test. Ask teacher. Chlorine has two stable isotopes with masses of 34. 97 amu and 36. 97 amu. What is the relative abundance of the two isotopes? a. b. c. d. e. 50. 00% 35Cl and 50. 00 % 37Cl 35. 45% 35Cl and 64. 55 % 37Cl 64. 55% 35Cl and 35. 45% 37Cl 24. 23% 35Cl and 75. 77 % 37Cl 75. 77 % 35Cl and 24. 23 % 37Cl 5

An analysis of hedge fund performance - Free Essay Example

Sample details Pages: 12 Words: 3685 Downloads: 4 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? 1. INTRODUTION: Hedge funds are actively managed portfolios that hold positions in publicly traded securities. Gaurav S. Don’t waste time! Our writers will create an original "An analysis of hedge fund performance" essay for you Create order Amin and Harry M. Kat (2000) stated on their report that A hedge fund is typically defined as a pooled investment vehicle that is privately organized, administrated by professional investment managers, and not widely available to the public. It charges both a performance fee and a management fee. It allows a flexible investment for a small number of large investors (usually the minimum investment is $1 million) can use high risk techniques. 1Now days it is very clear that in the matter of alternative investment mutual fund is not performing well. As a high absolute returns and typically have features such as hurdle rates and incentive fees with high watermark provision hedge fund gives a better align to the interests of managers and investors. 2Moreover mutual funds typically use a long-only buy-and-hold type strategy on standard asset classes, which help to capture risk premia associate with equity risk, interest rate risk, default risk etc. However, they are not very helpful in cap turing risk premia associate with dynamic trading strategies. That is why hedge fund comes into the picture. This is the year of 2009, which takes the greatest history of the world in the following century. In the year of 2008 the world saw the greatest fall down of the world economy. Lots of people missing their jobs, lots of company were stopped. The world economy faced the highest losses in the history. These all factors are showing only one way to makeover from that greatest downfall that is hedging. 3The last couple of decades have witnessed a rapidly growing in the hedge funds. Relative to traditional investment portfolios hedge funds exhibit some unique characteristics; they are flexible with respect to the types of securities they hold and the type of the position they take. 1 Agarwal, V. and Naik, N. (2000). Multi-period performance persistence analysis of hedge fund s. The journal of financial and quantitative analysis. Vol. 35, No,3. PP-327. 2 Agarwal, V. and Nai k, N. (2004). Risks and portfolio decisions involving hedge funds. The review of financial studies, Vol. 17, No.1. PP-64. 3 Journal of banking and finance 32(2008) 741-753- Hedge Fund Pricing and Model Uncertainty by Spyridan D. Vrontos, Ioannis D. Vrontos, Daniel Giomouridies. ­Ã‚ ­ 4The number of FOHFs increase by 40% between 2001 and 2003, and now comprised almost two third of the $650 billion invested in the USAs hedge fund market. Due to its nature it is difficult to estimate the current size of hedge fund industry. 5Van Hedge Fund Advisors estimates that by the end of 1998 there were 5380 hedge fund managing $311 in capital, with between $800 billion and $1 trillion in total assets, which indicates the higher number of recent new entries. So far, hedge fund is based on American phenomena. About 90% hedge fund managers are based in the US, 9% in Europe and 1% in Asia and elsewhere. Now a days around 5883 hedge funds are trading around the world. (*Barclay Hedge database ) 4 Financial times, 29th October, 2003. 5 www.vanhedge.com * https://www.barclayhedge.com/products/hedge-fund-directory.html 1.1 Categories of Hedge fund investment objectives: Event Driven: Distressed securities- manager focuses on securities of companies in reorganization and bankruptcy, ranging from senior secured debt to the common stock of the company. Risk arbitrage- manager simultaneously buys stock in a company being acquired and sells stock in its acquirers. Global: International- manager pays attention to economic change around the world (except the United States) but more bottom-up oriented in that managers tend to be stock-pickers in markets they like. Uses index derivatives to a much lesser extent than macro managers. Emerging- Manager invests in less mature financial markets of the world, e.g. Hong Kong, Singapore, Pakistan, India. Because shorting is not permitted in many emerging markets, managers must go to cash or other markets when valuations make being long unattractive. Regional- Manager focuses on specific regions of the world, example- Latin America, Asia, and Europe. Global macro:Opportunistic trading manager that profits from changes in global economies typically based in major interest rate shifts. Uses leverage and derivatives. Market neutral: Long/short stocks- half long/half short. Manager attempts to lock-out or neutralize market risk. Convertible arbitrage- Manager goes long convertible securities and shorts the underlying equities. Stock index arbitrage- Manager buys a basket of stocks and sells short stock index futures, or the reverse. Fixed income arbitrage- Manager buys T-bonds and sells short index futures or the reverse. Short sales: Manager takes a position that stock prices will go down. Used as a hedge for long only portfolios and by those who feel market is approaching a bearish trend. U.S Opportunistic: Value Manager focuses on assets, cash flow, book value, out-of-favor stocks. Growth Manager invests in growth stocks, revenues, earnings, and growth potential are keys. Short term Manager holds positions for a short time frame. Fund of fund: Capital is allocated among a number of hedge funds, providing investors with access to managers they might not be able to discover or evaluate in their own. Usually has a lower minimum than a hedge fund. Source: Carl Ackermann, Richard McEnally, and David Ravenscraft, The performance of hedge funds: Risk, Return and Incentives, Journal of finance 54, no.3 (June 1999) figure 1, page-843. Reproduced from a hedge fund database firm named Managed Account Report (MAR) Inc, and distributed through LaPorte Asset Allocation System. 2. Literature review: Despite the increasing interest and recent development, few studies have been carried out on hedge funds comparing to other investment tools like mutual funds. An analysis of Hedge Fund performance 1984-2000 by Capocci Daniel using one of the greatest hedge fund database ever used on his working paper (2796 individual funds including 801 dissolved), to investigate hedge funds performance using various asset-pricing models, including an extension from of Carharts (1997) model combined with Fama and French (1998), Agarwal and Naik (2000) models that take into account the fact that some hedge funds invest in emerging market bond. At the end they found that their model does a better job describing hedge funds behaviour. That appears particularly good for the Event Driven, Global Macro, US Opportunistic, Equity non-Hedge and Sector funds. Since the early 1990s, when around 2000 hedge funds were managing assets totalling capital of $60 billion, the subsequent growth in the number and asset base of hedge funds has never really been refuted. The industry only suffered from a relative slowdown in 1998, but since then has enjoyed a renewed vitality with an estimated total of 10,000funds managing more than a trillion US dollars by the end of 2006. The growing trend of the sector remained remarkably sustained during the stock market collapse that started in March 2000, when the NASDAQ composite Index reached an all-time high of 5,132 and finished three years later with a floor level of 1,253. In the meantime, the global met asset value (NAV) of hedge funds continued to grow at a steady rate of 10.6% (Van Hedge Funds Advisors International, 2002), contrasting with a decrease of 2.7% in the worldwide mutual fund industry ( Investment Company Institute, 2003). In 2001, Capocci and Hubner(2004) estimated that there were 6,000 hedge fund managing around $400 billion. In 2007, Capocci, Duquenne and Hubner (2007) estimated that there were 10,000 hedge funds managing around $ 1 trillion. This is a growth of 11% in the number of funds and 26% in assets over six years (6PhD thesis paper by Daniel P.J. Capocci). Other studies from practitioners Hennessee (1994), and Oberuc (1994) also showed an evidence of superior performance in the case of hedge funds. Ackernann and Al. (1999) and Liang (1999) who compared the performance of hedge funds to mutual funds and several indices, found that hedge funds constantly obtained better performance than mutual funds. Their performance was not better than the performance of the market indices considered. They also indicated that the returns in hedge funds were more unstable than both the returns of mutual funds and those of market indices. According to Brown and Al. (1997) hedge funds showing good performance in the first part of the year reduce the volatility of their portfolio in the second half of the year (Capocci Daniel- An analysis of hedge fund performance 1984-2000). Taking all these results into account hedge funds seems a good investment tool. 6 PhD thesis paper by Daniel P.J. Capocci. Electronic copy available at: http//ssrn.com/abstract=1008319. 3. Research design and Methodology: In this section I would like to describe the empirical methodology to be used to measure the performance of hedge fund as well as the performance of FTSE 100 and SP 500. My aim is to identify which will give the better return for an investor. To investigate hedge funds performance and performance of FTSE 100 and SP 500 my study will follow some models like 4-factor model from of Carharts (1997) model, the 3-factor model from Fama and French (1993) models, the Sharpe ratio (1966) and Jensens alpha (1968) and CAPM. I divide my research into three sections. First section will analyse the performance of hedge funds, FTSE 100 and SP 500. This section sets out the models of performance measurement I will use. Second section will made correlation between Hedge fund vs. FTSE 100 and Hedge fund vs. SP 500 to find out the better portfolio. Third section will exposes a discussion as well as a description of my database and finally concludes the paper. 3.1. Performance measure models: The 4-factor model from Carhart (1997): Carharts (1997) 4-factor model is an extension of the Fama and French (1993) factor model. It not only takes into account the size of the firms, the book to market ratio, but there is an additional factor for the momentum effect. Grinblatt, Titman and Wermers (1995) define this effect as buying stocks that were past winners and selling past losers. This model is estimated with the following regressions: Rpt-Rft=ÃÆ'Ã… ½Ãƒâ€šÃ‚ ±p+ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²pi (Rmt -Rft) + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p2 SMBt +ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p3 HMLt + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p4 PR1YRt + ept t= 1,2,,T Where SMBt= the factor mimicking portfolios for size; HMLt= the factor mimicking portfolio for book to market equity; PR1YRt= the factor mimicking portfolio for the momentum effect7 7 for a description of the construction of PR1YR see Carhart (1997). As stressed by Daniel et al. (1997), this model, which is effectively a four factor Jensen measure, assumes that betas with respect to the returns of four zero i nvestment factor mimicking portfolios, are appropriate measures of multidimensional systematic risk. According to this model, in the absence of stock selection or timing abilities, the expected return for a fund is the sum of the risk free return and the products of the betas with the factor risk premium, which are simply the expected returns of each of these zero investment portfolios. The Carhart (1997) approach identifies a matching passive portfolio return for each fund return. This passive return, which is subtracted from the fund return to generate ÃÆ'Ã… ½Ãƒâ€šÃ‚ ±p, is a weighted average of the returns of the Carhart factor portfolios and the return of a one month T-bill (Capocci Daniel 2001, Journal- European Private Bankers, Nov, 2001). The 3-factor model from Fama and French (1993): Fama and French (1993) 3 factor model is estimated from an expected form of the CAPM regression. It takes the size and the book to market ratio of the firm into account. It uses the time series approach from Black, Jensen, and Scholles (1972) in the sense that the monthly returns on stocks are regressed on the returns to a market portfolio of stocks and mimicking portfolios for size and book to market. It is estimated from the following extension of the CAPM regression: Rpt-Rft=ÃÆ'Ã… ½Ãƒâ€šÃ‚ ±p+ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²pi (Rmt -Rft) + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p2 SMBt +ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p3 HMLt + ept t= 1,2,,T Where, SMBt= the factor mimicking portfolios for size, and HMLt= the factor mimicking portfolio for book to market equity. SMLt which comes from small minus big meant to mimic the risk factor in returns related to size, and HMLt which comes from high minus low meant to mimic the risk factor in returns related to book to market equity8. HML (respectively SMB) is neutral relativ e to the size effect (respectively to the book to market). This means that these factors do a good job isolating the firm-specific components of returns (Fama and French 1993, 1995, 1996 and 2000). 8 See Fama and French (1993) for a precise description of the construction of SMBt and HMLt. The Sharp Ratio (1966): The Sharp ratios (1966) calculate the ratio of the average excess return and the return standard deviation of the fund that is being evaluated. As such it measures the excess return per unit of risk. Assuming all asset returns to be normally distributed, the CAPM tells us that in equilibrium the highest attainable Sharpe ratio is that of the market index. In more general terms, the market indexs sharp ratio represents the set of return distributions that is obtained when statically combining the market index with cash. With the market index being highly diversified, these distributions offer the highest achievable expected return for every possible standard deviation (Gaurav S. Amin and Harry M.Kat (2002), Hedge fund performance 1990-2000). Jensens Alpha (1968): Jensens alpha was introduced in Jensen (1968) and equals the intercept of the regression: (Rh-Rf)= ÃÆ'Ã… ½Ãƒâ€šÃ‚ ± + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² (Ri- Rf) + eh, Where Rh is the fund return, Rf is the risk free rate and Ri is the total return on the market index. Like the Sharpe ratio, Jensens alpha is rooted in the CAPM. According to the CAPM, in equilibrium all (portfolios of) assets with the same beta will offer the same expected return, any positive deviation therefore indicates superior performance (Gaurav S. Amin and Harry M.Kat (2002), Hedge fund performance 1990-2000). Capital Asset Pricing Model: The first performance model that will be used is a capital asset pricing based single index model (CAPM). This model developed by Sharpe (1964) and Linter (1965) is the oldest performance evaluation model. Its formula is the following: Rpt Rft = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ±p + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p (Rmt-Rft) + ept t= 1,2,, T Where, Rpt= return of fund p in month t, Rft= risk free return on month t, Rmt= return of the market portfolio on month t, ept= the error term, ÃÆ'Ã… ½Ãƒâ€šÃ‚ ±p and ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²p= the intercept and the slope of the regression estimated. The intercept of this equation, ÃÆ'Ã… ½Ãƒâ€šÃ‚ ±p commonly called Jensens alpha (1968) is usually interpreted as a measure of out or under performance relative to the market proxy used. There are several extension of this model have been developed like- the Breeden (1979) intertemporal CAPM or the Ferson and Schadt (1996) CAPM that allows time variation in the expected returns and the risk (Capocci Daniel 2001, An analysi s of hedge fund performance 1984- 2000 ­). 4. Data Preparation: For data preparation my first step will be to collect the monthly data of the hedge fund index, FTSE 100 and SP 500. For my data collection I will use some sources like- Credit Suisse/ Tremont Hedge Fund Index (CSTHFI hereafter) which is an appropriate representative of the entire hedge fund industry, there are three biggest database of hedge fund in the world these are Managed Account Reports (MAR), Hedge Fund Research, Inc (HFR) and TASS Management (TASS). These databases were the most used in academic and commercial hedge fund studies. For the FTSE 100 and SP 500 I will use yahoo finance. 4.1. Bias in Hedge fund data: According to Ackermann et al. (1999) and to Fung and Hsieh (2000), two upward biases exist in the case of hedge funds. They do not exist in the case of mutual funds, and they both have an opposite impact to the survivorship bias. Survivorship bias is an important issue in mutual funds performance studies (see Carhart and al. 2000). This bias is present when a database contains only funds that have data for the whole period studies. In this case, there is a risk of overestimating the mean performance because the funds that would have ceased to exist because of their bad performance would not be taken into account. The two upward biases exist because, since hedge funds are not allowed to advertise, they consider inclusion in a database primarily as a marketing tool. The first phenomenon stressed by Ackermann and al. (1999) and called the self-selection bias is present because funds that realize good performance have less incentive to report their performance to data providers in orde r to attract new investors. The second point called instant history bias or backfilled bias (Fung and Hsieh 2000) occurs because after inclusion a funds performance history is backfilled. This may cause an upward bias because funds with less satisfactory performance history are less likely to apply for inclusion than funds with good performance history (Capocci Daniel 2001, An analysis of hedge fund performance 1984- 2000 ­). To avoid these biases I will try to take all funds both living and dissolved into account. Once I have collected all the data that I need I will use SPSS to test the correlation between my two benchmarks FTSE 100 and SP 500. 5. Contingency Plan: To make my research effective I made a well constructed plan. I have drafted a project plan (Appendix A) with scheduled dates for when I intend to complete sections for submission. After completing my final exam I will jump in to this field. Advises from previous students who completed their dissertation, I made my project plan flexible to keep some things in mind like supervisors holiday and any unforeseen events such as my illness. I will try to keep a good communication with my supervisor for checking that I am in right track. I plan to make some formal meetings with my supervisor to discuss my progress and I will try to inform him about the state of my work. It is hard to spending too much time over one task and going off track, I hope I will manage this if there is no rush at the very last minute. Another worry is the collecting and analysing the data, that is why I plan to collect the data early June once I have finished my research design. If I face any kind of difficulties I will inform him and make a cut-off point where I should stop searching the board data and start my own primary data. As I do all SPSS classes and briefly touched about this, I think it will be easy to analyze the data but I need to increase a bit of use of control on it by practicing more. So I will set aside time for collecting data and practice more SPSS for regression analysis. I hope if all these go well, I will make my dissertation very effectively. REFERENCES [1] Ackermann, C., R. McEnally and D. Ravenscraft. The Performance of Hedge Funds: Risk, Return and Incentives. Journal of Finance, 54 (1999), 833-874. [2] Agarwal, V. and N. Nail. 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