114 So You Want to Be a Hedge Fund Manager?

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【Prerequisites】

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High school students are interested in researching finance areas and want to pursue an industry or academic career in finance. Students need to know Pre-calculus.

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【Description】

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When are markets efficient? When are markets inefficient? What limits to arbitrage cause markets to be inadequate? This research workshop will delve into exploring many such questions. In module 1, the professor will guide students in original research based on empirical asset pricing and capital markets. In the course, students will examine particular asset prices to see what general principles lead to efficient markets and what general principles lead to inefficient markets, and what – if anything – can be done to cause prices to converge back to fundamental

value. Along the way, students will learn the basic financial theory of asset pricing, e.g., discounted cash flows), financial instruments (e.g., debt, equity, and options), financial markets (e.g., stock markets, private debt markets), and limits to arbitrage (e.g., investor inattention, information collection, and processing costs). The workshop probes how the effects of limits to arbitrage have shaped prices in central and developing markets. During Module 2, students will work with the professor to create a research project that involves finding asset prices that have deviated from fundamental value and exploring why. The project will hinge on studying a historical or current episode through the lens of financial theory and supported by the student’s analysis of economic data surrounding a market dislocation. If the students achieve outstanding performance, students can apply to the internship opportunities provided by the faculty. 

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【Sample research topics】

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• Investment Banking Conferences and Their Impact on Stock Price

• hypothetical challenges of applying the “Lazy Prices” mechanism at constructing alpha-generating stock portfolios in China

• Other Litigation: A New Measure of 10b-5 Class Action Litigation Risk