The Purchasing Power Fund: A New Kind of Financial Intermediary
Nils H. Hakansson
Financial Analysts Journal, 32, November-December 1976, 49-59.
The underlying assets of the fund are managed like an index fund. The range of possible outcomes, expressed as a return on the initial value of the assets, in finely divided, and a particular kind of supershare assigned to each division. On the maturity date the supershare corresponding to the actual outcome pays off; the others become worthless.
By purchasing the appropriate mix of various kinds of supershares, an investor can purchase the equivalent of a mutual fund share, a purchasing power bond, a levered position in a mutual fund, a short position in a mutual fund, a call or a put-and all without borrowing either shares or money.
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