Faculty of Commerce, Law and Management (ETDs)

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    An analysis of fraud detection using Benford’s law and the bias ratio
    (University of the Witwatersrand, Johannesburg, 2024) Govan, Bhavik; Britten, James
    This study explores the detection of fraud within the South African hedge fund industry through the utilisation of the bias ratio and Benford’s law. An examination is conducted on a sample consisting of 83 hedge funds, encompassing both Qualifying Investor Hedge Funds (QIFs) and Retail Investor Hedge Funds (RIFs), to identify potential anomalies. Six funds with elevated bias ratios are flagged for further scrutiny, indicating possible fraudulent activities. Benford’s law is applied to corroborate these findings, revealing non-conformity in all but one of the flagged funds. The study emphasises the importance of a multifaceted approach to fraud detection, combining various metrics and methodologies to enhance the overall understanding of a hedge fund’s returns. While the bias ratio and Benford’s law offer valuable insights, their application requires careful consideration of fund type and strategy. Regulatory intervention and investor vigilance are essential for safeguarding against fraudulent activities in the hedge fund industry.
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    An Investment House Using Contracts for Differences to Grow the Business
    (University of the Witwatersrand, Johannesburg, 2023) Maine, Mothepu Zebedia; Horne, Renee
    The world of financial markets and investments has grown enormously over the years, with various products developed over the years. Besides the normal shares that one can invest in, bonds, Single Stock Futures (SSF), exchange traded products/notes and Contracts for Differences (CFDs) have been introduced into the financial markets. SSFs and CFDs are leveraged financial instruments that are derivatives of shares. They leveraged, meaning that the profits and losses resulting from the derivatives are enhanced when compared to profits and losses from normal shares investments/trading. The research conducted for this business venture report indicates that there is a potential market gap that can be exploited. The SSFs are more costly compared to CFDs and they expire every three months. The CFDs on the other hand do not expire, meaning they can be held for a long time, as long as they don’t move too fast and far against your position. This business venture proposal justifies through research, that the CFDs are the cost-effective derivative instruments through an investment house to grow a business. Data analysis over hedge fund managers’ performance through unspecified derivatives, and hedging activities by different listed firms gleaned from their financial statements give a strong assurance that the business model based on the CFDs is viable. The business model and proposal was first developed using the business canvas model together with some financial assumptions, and then expanded into the report.