Which one of the following accurately describe all the steps for LTCM
to earn very high returns from trading against small bond mispricing
without being affected by market-wide interest rate changes over
time?
First, buy illiquid assets; Second, short liquid assets at the same
time. Third, use leverage.
First, buy illiquid assets; Second, short liquid assets at the same
time. Third, use leverage. Fourth, dynamic hedging.
First, buy illiquid assets; Second, hold those assets for the long
term without trading.
First, short liquid assets; Second, borrow money from
investment banks to return cash to investors when investors
have redemption demands.