a) Describe the differences between a hedge fund and a mutual fund b) Explain why it is beneficial to measure private equity performance c) Assuming two companies A and B with a CAPM beta of 0.4 and 1.2 respectively. Assume that A is under-priced and B is overpriced. Create a trading strategy that has a no sensitivity (according to CAPM) to the market movements and benefits from both expected price movements.
