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Name: Futures Bond Course Number: FI 478 Professor’s Name Date Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen A.	Summary of Chapter 1 This chapter states how secretive hedge Funds has been to an extent that even the workers that works in the organization did not know how the organization works. The chapter explains that it is because of its secrecy that its aggressive entry in the market has been hampered. Since it is important to understand more about the hedge funds before exploring much about the concept, the chapter develops an interview with one of the hedge fund managers to create more understanding on the element as illustrated in the table II. The concept is understood through seller Jim explanation about how he bets companies in divesting state of workers management and as well as the financial crisis. He tells how he struggles to turn their operation around until they are able to gain footing in terms of normal operation. Case in point for Jim was when Enron was saved from its immediate collapse. Still Cliff Asness discuss more on the idea of hedge funding by developing the scenario case of how various computer models  buys and sells many of securities through the online   enabled links. Since his augments is based in the academic findings,  he explains how the momentum effects was turned into the real world of investment strategies to form the compliment for the value and other factors. Therefore, the man who broke the Bank of England talked that the also highlights much about the concept of hedge fund by explaining more on the element micro bet  and his deal of macro bet and the deals about the element of evolutionary market. The chapter presents the interview showing how the mangers  and other participants in the entire hedge fund game interact t make the whole of the hedge fund get its revelation to the reader of the chapter. B.	Summary of Chapter 2 The chapter forms the extension of the idea of hedge fund. Since the whole idea of hedge fund is enshrines in the trading strategies, trading strategies has the components that forms the key featured that investor always bases while attempting to develop investment move. As such, hedge fund call for various strategies  which  is believed to  suitable in   guiding  an investor  to conduct meaning  investment. The chapter presents the idea of investment strategies through the process of performance measurement. The major investment strategies and styles are discussed with much of emphasis put on those that are value oriented. Still the chapter puts some lights on the key major issues affecting investment through the presentation of the two main interpretation of the two possible interpretation if the performance measures. Firstly, there is the trading opportunity where one buys when the market prices are below the theoretical values and later sell when the prices have gone above the theoretical values. Secondly, that when discrepancy can reflect that one’s theoretical value is wrong. C.	Summary of Chapter 3 The chapter presents the information about finding the finding and Back testing Strategies by basing on the profiting inefficiency and efficiency markets. According to the chapter, the efficient market is where the market price is equal to the fundamental values. Therefore, the chapter presents that the search for the best trading strategies will always lead to the issue of the money value. As such, the market behavior of efficient and inefficient always finds its way to the investors’ minds through the progressive search of the best investment  strategies. The money managers on the stock market will be motivated to get involved in the active investment especially when the markets are efficient. Nevertheless, the inefficient market structure, is where the prices are pushed away from the values due to various demand pressure and the friction within the other market institutions. The extent of market  efficiency and its inefficiency  is much empathized in the chapter through various individuals who are known for their contributing in promoting   sense about the element of market structures,  therefore the Nobel prize winner Eugene Fama,  whom   most of the time is called father  and prospects of the  element of  the efficient  market is one of  them, secondly, there is also Robert Shiller who is always understood  as the patron the  behaviorist economics and Lars  Hansen  who  according to  the chapter is the pioneer of the market tests on  the element of inefficacy D.	Summary of Chapter 4 The chapter presents the portfolio construction and risk management defining money or liquidity risk as the   extend of one being forced to take  the action of selling  what one has   in order to meet a large transaction costs. The chapter emphases on the role of financial manager in taking up the financial costs during the time of market instabilities, there is confirmation in the chapter that the amount of money cost incurred the money managers will directly lower the returns received by the investors. The financial managers always takes on the understanding  the whole element of efficiency  and  inefficiency  on the market order to understand the best  investment  period to take the initiative of investment and also when to undertake the financial  risks that  will ensure the safety of  the investor returns. Risk managers are also upon to understand in the chapter that the since competition and security returns net of all, and all the relevant market friction are very close to their full levels of efficient. Therefore such status makes them not to have the capacity to consistently  beat the market. Anyhow even if the return  showing the indicators of  nearly being efficient  the  market prices still have the capacity  to deviate  to the from their present  values of the future cash flow. The chapter presents the simple understanding  the market efficiency in the simply stating that buying the stock at relatively lower price will depend with the prices of various days that be today and tomorrow E.	Summary of Chapter 5 The chapter makes presentation on financial strategy and trading by majorly focusing on the fund liquidity and the market structure. The chapter emphasizes on the need to understand the market situation before the financial takes the initiative of putting their liquidity of service. As such, liquidity is defined as the ability by the investor to transact. When the markets are effective, there ability by the financial managers to make  the profit is relatively higher as compared to when the markets are unfavorable. The chapter presents that the market structures always determines the availability of the liquidity on the financial markets. Inefficient market will automatically scare away investor who tends to hoard their liquidity. It is essential to understand that market always undergoes various staged of evolution as it targets to walk towards efficient level of its former state of inefficiency. Therefore, similar comparison is given to the Darwin’s principal of survival for the fittest. The traditional notion of perfect market efficiency is is similar to the observation that the also evolves to the level where it can be said to be at the level of the perfect fit majorly  in  the process of its attaining  its perfect standard. As such fitness is not compulsory status for all species, for such case, the market structures are also like that. F.	Summary of Chapter 6 The chapter presents an introduction to equity, valuation and investing. The element of equity is subdivided as into long- short equity, dedicated and bias and quant equity. Therefore, the discretion managers  always undertakes the long   and short program of stick checks of determining the value of each company and pro properly  makes the necessary comparison of its capacity to make  profit  in relation  to its value. As such, the chapter also presents the accounting attached on accounting numbers  its relation to determining the reliability in effecting the future determination of the company cash flow. Therefore, author  sums that some companies’ falls cheap upon being abandoned by various investors. For such reasons, some investors can that  are also known as value investors run t such companies, by them and later on hold on   them for some time  until they reach at   the point of appreciation. G.	Summary of Chapter 7 The chapter comprise of the discretionary equity investing. The author purposed the chapter to look inhabits the Interview with Lee S. Ainslie III of Maverick Capital. The interview is a presentation of the talk with the Lee S who through the chapter presents the idea of risk management by revealing how his Maverick Capital had built a quantitative system that could inform their key financial resourced so as to help the manager bring the risk under control. Therefore, the interview further deepens to explain more about the discretionary trading as the interviewee agrees that he learning that the process of learning an analytical took is very essential since such tools can help the managers to understand various situations on the market. Therefore discretionary of quantitative, managers  should  have the capacity to  undertake the historical analysis of its performance  and its trading  idea before  thinking  about implementing it in large size. The interview goes deeper to discuss how it’s easy to be a contrarian, except when it’s profitable. In such way, the approach tries to exhaust the short term opportunities for example by trying to come uo with the clear prediction of the company’s next announcement over its earning. The other element that is propagated in the chapter is the element of buy on rumors and sale of news. Therefore, the simple understanding over it  is that if one know that  the rumors are true  then there is  likelihood that one will engage in the illegal business, just  similar  way to how Gordon  Gekko was played by Michael Douglas in  the movie. H.	Summary of Chapter 8 The chapter makes the presentation of the dedicated short bias through an interview with the James Chanos of Kynikos Associates. Interview presents an understanding that some managers operating under the dedicated short bias  have the tendencies of looking for companies that are almost  closing  down their operation for instance they  search for the hotels  where  almost no one can admire utilizing  their facilities  or even companies closing down due to fraud related cases  and afterwards ensure that the fight against the general uptrend in the market to have  such  companies realize  the  right footing. Such managers are also good in understanding the element of equity risk premium where the stock often goes up more  than  when it support to go down. It is important to understand that almost all long- short hedge fund and dedicated short-bias hedge involve in the activities of discretionary trading I.	Summary of Chapter 9 The chapter is also another example of interview with Cliff Asness of AQR Capital Management, based on the element of quantitative equity investing. The interview presumes the idea of traditional form of trading which through the chapter, it is defined as the quantitative investment or in other words it is called quant for short. The interview in the chapter present an analysis about the quant definition of their trading rules as they are also confirmed to be behind rule implementation within their systems. Sine quants have the small diversified businesses the company develops small edge on each of many diversified trades through the sophisticated idea processor that cannot be easily be processed using the non-quantitative methods. The interview also reveals that some quants focuses on high frequencies exit trade where   they at times are meant to exit trade within a short period of time after it has been installed in the  trading system, others, they always focus on the statistical pattern with others on the lower frequency trades. Important to note is that the fundamental quant investing considers many of the f the same factors as discretionary traders, seeking to buy cheap stocks and short sells expensive ones. J.	Summary of Chapter 10 The chapter is all about an introduction to asset allocation. Its major concern is in the asset classes. Through its introduction, the case of Gordon Gekko as an equity trader in the movie industry is present. The emphasis in the issue of asset classes is advanced through the Eddie Murphy who was macro traders with Gordon in t the movies trading  business. Through the chapter we come to understand how using future markets to bet the direction of orange juice as the micro strategies are divided into global macro and managed future global macro bets in. the general view in such case is that  there is a tendency that all stock market will either rise up or go down, the inflation arising from such will considerably lead to spike in the prices of gold or that even the emerging trends on the market will either survive or fail to exist. The chapter stresses on the need to solve the issues that causes  the challenges of inefficiency market. By doing so, it goes to recognize the need s and the efforts that are required in the process of understanding the process of analyzing the coasts and setting up the structures and opportunity costs of the  highly skilled people  so as for  the process can become successful for the purpose of investors. Since there are a lot of elements involved the chapter states  that some  of  the work such  as money management  can easily  be done  by the manager who run the pools  of money such as mutual hedge funds pension funds and insurance companies.

K.	Summary of Chapter 11 The chapter talks about the need to understand more about the idea of global micro investing. To make the idea clearly understandable, the author presents the interview George Soros Fund management. The interview reveals various ideas that are learned from George. For instance, it is revealed that some global macro trader are font of taking the large position as it was learned from the ideas of Georges Soros who confirms that when one has large conviction in businesses,, then it is essential that he fully takes part in the whole process in bigger since it take courage for one to grow and get well established. The other idea is about risk management where it is said that it is central for the sake of future investor as it is stated that  when  the future investors lose  their cash because the trend in often on directional change as it  turn to flip position  and get prepared to take the new trend. Also, George Soros expresses that though it important to put emphasis on risk management, but also one should mind of going for jugular  especially in the rare cases when the upward is large with the downward being limited. The chapter documents that there are various strategies of investments employed by the investors. By using the common the example of hedge fund, the strategies in the chapter are  very  core in the process or rather strategies involved in the investment process majorly by the most  aggressive investors  though there  might be some similarities in  some  strategies,  the  common different among them is  that  whereas  as  the hedge fund can  be invested in long-term, other investors may  instead turn to invest in   short-term investments. An example of hedge fund strategies is through the investment in IBM short sells and CISCO correspondence on mutual funds and overweighing its allocation. L.	Summary of Chapter 12 The chapter presents  the managed future trends following investing. For this  the author presents the case of the interview carried out by David Harding of Winton Capital Management. The main issues in the interviews are the expression of the managed future hedge funds and the talk focuses on the price data through statistical methods otherwise called the managed future quants, or using the rule of the thumb. The talk reveals that the management in the future investment makes the investors to identify the trending markets that have become over extended and or snapbacks caused by the countertrend. Also the interview reveals that  since people are front of under reacting to market trend news  there is always and eventual  consequences of eventual revision instead of following  news,  therefore  the future investor only get focused on the price under the common  saying that the trend is your friend. The interview also presents the case of the deference between  the saying that the bulls get rich, bears get “When you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig”. And that the “Bulls get rich, bears get rich, but pigs get slaughtered”. Since they come from different back grounds,  they are the common the approaches according to the interview that bank economists use in their trading activities. In such way, some analyses data, other use it for the process of following the trends and moves of the central bank with other travelling abroad for the sake of gathering the trade ideas. The interview also revealed that some global macro funds also operate inform of thematic traders. Accordingly they operate by putting their focus on few themes as they express each of the themes in terms of different types of trades. The chapter presents the case of China  stocks or eve the merchandise imported from china. Though the global trading partner is ever different from each other, there are total similarities. As such, the macro trader will easily express his views the way they earn income even if nothing changed on the market

M.	Summary of Chapter 13 The chapter is all about the introduction to the element of arbitrage pricing and trading. Being an introduction the author turns to arbitrage strategies as fixed income, convertible bond arbitrage and even driven investment. According to the chapter, fixed income arbitrage refers to the strategies that are based on the number of convergence trades. The common example of fixed income arbitrages are off-the-run Treasury bonds and the betting on swap spreads among others. Convertible bond arbitrages are packages of the straight bonds and the call options on the company stocks, and the even driven investment are the elements that tries exploit the opportunities that arises around  the cooperate events. Therefore it is easy to become a contractor especially when the activity is more profitable unlike when the activity is not in position to generate cash. For such reasons, the companies used such an approach in order to exploit the shorter term opportunities found within its avenue of investment. Still, the chapter suggest that  such  an approach  can as well be used to predict the  companies earning better  than  the rest  of other companies on  the  market. Therefore, it is possible to state that if earning will come higher than the company is expected then he best approach will be that the individual company strives to by the securities quite early. N.	Summary of Chapter 14 The chapter is about the interview with Nobel Laureate Myron Scholes to develop more understanding on thee element of fixed income arbitrage. Understandably, the interview reveals that the biggest risk in convergence trade by stating that such the traders are at times forced to unwind the trade even when the price gap widens as the trade is at threat of losing money. Accordingly, it is also understood through the interview that the market can also remain rational longer than they can remain solvent. Myron Scholes reveals that sometimes the fixed arbitrage maturity  may contain finite maturity which may delay triggering  the convergence arbitrage to happen but sooner it is effected  the trade will have turned profitable. O.	Summary of Chapter 15 The chapter is the presentation of the interview with Ken Griffin of Citadel over the idea of convertible bond arbitrage. Major revelation in the interview is that convertible bond arbitrage cans  the computed through the pricing option techniques as a function of the company stock price vitality. It is also revealed that the computation option of the makes the convertible bond to above the market price since at  times  the elements of convertible bond can be hard to be sold easily as the investors  are forced to  compensate for the inherent liquidity risk  that is involved. Convertible bond are also the package of straight cooperate bonds and call options that the company usually possess on the stock. The chapter suggests the use of the option pricing  methods to compute the convertible bond value. As such, theoretical value of the market tend to be operate above the market since the convertible one may not have the capacity to operate beyond the expectable level that cannot facilitate any form of business P.	Summary of Chapter 16 Being the last chapter, the author makes it to have an interview with John A. Paulson of Paulson & Co. as he seeks to express the idea of event-driven Investments. Major elements noted in the interview talk are that classical trade is a merger arbitrage where the managers by the target company typically upon the announcement and  the price jump with the prospective of earning the different profit between the target stock price and the merger offer. The interactive talk also presents the event in the stock market where the managers trade in the cooperate variety of cooperate securities not just securities but even in cooperate bonds and loans. Finally, the chapter ends by revealing that sometimes the event manages may focus the yet to collapse company to turn them around and make them begin realizing profits The other type of events that  drives the process of investment is the people’s incomes. As such, the fixed incomes event can easily drive the affect the basis of investment is often based on negative feedback generated. For instance, the trading bet on the mean revision can be complimented by the positive feedback trading will be directly affect the market as well similar situation were discussed by Ainslie and Chanos whose their major focus was on the fundamental value of investment. Another investment strategy was discussed in the chapter through table II. The element of liquidity provision which involves the buying securities with high liquidity risk from other investor that wants to raise liquidity for the sake of investment. Such type of investment often comes in many styles, shape and even form. Therefore, carrying trade is one way of conducting the business of buying the securities high carry with hopes that if market remains the same, then we the security will have high returns. Q.	Summary of the Chapters The summary of my learning from the book of Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen is that the book  has a clear strategic plan upon which an individual can exhaust to undertake an effective   sound investment process. Various chapters were arranged by the author intending at taking the reader down the lines of how various issues interacts to make the idea of investment come out successful. The cases of market efficiency as the key determinant for the investors is given enough emphasis as the author also took me through the lines of various trends in stock market, indeed, the book of Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen is another work piece that I will admire reading once more

Frequency Droop Control Name Institute Affiliation

Frequency Droop Control The article Loix, et al, 2007, hypothesis how the number of grid connection if increased on the units can become very difficult to exclude the groups from the getting involved in the process of the controlling the primary grid voltage and the strength of the frequency. The paper theorizes two models. Firstly, the researcher looks at the frequency droop control and the three-phase voltage to develop the bigger picture over the element parallel connected inverter. Which the researcher insists that it can also be used for the development of the grid energy source and the micro grid units. The general concept developed in the by the researcher in the article is the functionality of grid connections on its generation units. Arguably, the increase of more connection on source through the two ways of the three-phase and the frequency droop scheme makes the system to have the capacity to influence the operating mode of the system power supply as it has gained the capacity in determining the strength of the voltage discharge from the source. Therefore, the central concept of grid connectivity, the power of the connectivity and its connectivity gateway are the key feature that the researchers try to center in their hypothesis. The central argument presented by the researcher Loix, et al. is about how the availability of various power connections on the source generator can gain the capacity in determining the strength of the power discharge by the power source. T. Lux et al. narrows his concern on the element of two specific connection mode, namely three-phase and the frequency droop scheme. The article uses the two connection model which is systematically developed along the power source to explain the how the two models are responsible for the process power strength determination. Thought there is also the use of UPS connection system, the use of the two models are sufficient enough in giving more understanding on the grid process through three-phase and the frequency droop scheme systems. The method used by the researchers to determine the applicability of the hypothesis is the connection achieved through the two systematic approaches. As three-phase and the frequency droop scheme are considered as the best threshold, the searchers reinforced their knowledge through the involvement of the UPS format of grid connection. Therefore, the combination of the three central methods made the researcher achieve their studies through theorizing how the density on a given grid connection can act as the deterrent factor in influence the scale of energy discharge from the power source. Particularly, through the use of the three-phase and the frequency droop scheme which according to the researcher, are the key elaborative methods in their hypothesis of the A Three-Phase Voltage and Frequency Droop Control Scheme for Parallel Inverters. Through the laboratory test, the researchers were able to determine the functional mode of various phases as an attempt to prove the effectiveness of the A Three-Phase Voltage and Frequency Droop Control Scheme for Parallel Inverters. The systematic analysis of the laboratory test demonstrated that the increase in the phases of the grid brought more strength on the parallel system directly causing an effect on the strength of power discharge from the source generation system. Therefore, the researcher, proved their evidence by subjecting their theory on the lavatory test upon after analyzing various phases of electrical connection they were able to settle to at the A Three-Phase Voltage and Frequency Droop Control Scheme to the suitable one  in explaining  the how an increase in grid connection for Parallel Inverters can directly turn to become the determinant factor in understanding  how it affects the strength power production  from the primary source. The main values in the entire hypothesis are stationed under two main elements namely, the connectivity strength and power generator. Therefore, the researchers were able to maintain them through the consistency approaches applied to determine the effectiveness of the hypothesis. The theory explained in the article suitable suit in the entire literature through the systematic approach used by the researchers who were they were able to introduce the whole idea of A Three-Phase Voltage and Frequency Droop Control State the key concerned elements in the hypothesis and progressively get engaged in the process of deterring the applicability of the theory. And finally develop their findings which end with conclusion The article directly has its input to the knowledge of circuit development particularly to the field of electric engineering. The authors of the article were very eloquent with their language though technical, easily be understood. The section of a Three-Phase Voltage and Frequency Droop Control Scheme for Parallel Inverters is one of the great educative literature pieces that the researchers in the field of electric engineering will find informative ( Loix, et al, 2007).