Why might competitive pressure lead a hedge fund manager

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The article cited in Problem also noted that in 2005, Timothy Geithner, then president of the Federal Reserve Bank of New York, thought that leverage at hedge funds was rising, "probably because of heightened competitive pressure."

Why might competitive pressure lead a hedge fund manager to take on more leverage? Would the same reasoning apply to the managers of an investment bank? Briefly explain.

Reference no: EM131305003

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