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How Does a Prime Broker Assess the Creditworthiness of a Hedge Fund Seeking Leverage?

Due diligence on AUM, historical performance, strategy, management team, balance sheet, and liquidity profile.
Greeks.Live14.11.25

How Does a Prime Broker Assess the Creditworthiness of a Hedge Fund Seeking Leverage?

The prime broker conducts a thorough due diligence, reviewing the fund's assets under management (AUM), historical performance, investment strategy, and the experience of its management team. They also analyze the fund's balance sheet, liquidity profile, and existing debt obligations.

This comprehensive review determines the maximum leverage and trading limits granted to the fund.

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