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What measures did Long-Term Capital Management take to control funding risk?

OpenAI's Answer

Long-Term Capital Management (LTCM) utilized several strategies to control funding risk. One key measure was the use of term repos to finance most of its balance sheet. This approach was intended to mitigate the funding risk associated with their heavy reliance on repo financing—a type of short-term borrowing often used by hedge funds. By opting for term repos, LTCM sought to secure longer-term borrowing arrangements, thus reducing the frequency of refinancing needs and the exposure to short-term funding pressures.

For more detailed insights into LTCM's funding strategies, you can refer to the source here.

Long-Term Capital Management

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