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Risk
  • Potential for Mispricing: Investments in esoteric, infrequently traded securities may lead to difficulty in determining the true value.
     
  • Counterparty Credit Risk: Risk of Counterparty: Failure to deliver security on settlement day as agreed upon.
     
  • Short Covering: Risk that managers have to cover their shorts & repurchase securities at price higher than where they originally sold.
     
  • Margin Calls: Can result in forced selling of assets, possibly at a loss, on an already highly leveraged position.
     
  • Liquidity
     
  • Settlement Errors


 




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