Sunday, November 02, 2008

Dissecting The Bear Stearns Hedge Fund Collapse

by Investopedia Staff

The headline grabbing collapse of two Bear Stearns hedge funds in July 2007 offers fascinating insight into the world of hedge fund strategies and their associated risks.

In this article, we'll first examine how hedge funds work and explore the risky strategies they employ to produce their big returns. Next, we'll apply this knowledge to see what caused the implosion of two prominent Bear Stearns hedge funds, the Bear Stearns High-Grade Structured Credit Fund and the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund.



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