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Basic Question 2 of 9
Differences between hedge funds and mutual funds are:
II. Investors can buy shares of hedge funds in the open market.
III. A typical hedge fund transaction gives consideration to the specific tax needs of its investors.
IV. The minimum required investment is much higher for a hedge fund than that for a mutual fund.
I. Most hedge funds are exempt from many reporting requirements for the typical public investment company.
II. Investors can buy shares of hedge funds in the open market.
III. A typical hedge fund transaction gives consideration to the specific tax needs of its investors.
IV. The minimum required investment is much higher for a hedge fund than that for a mutual fund.
User Contributed Comments 4
| User | Comment |
|---|---|
| johntan1979 | III FACT: Hedge funds don't give a damn about your taxes. |
| johntan1979 | UPDATE on IV: Most hedge funds nowadays require a minimum of $1 million |
| ankurwa10 | On point (iii) while I do not have the experience of a hedge fund, fund-of-funds generally do seem to give consideration to tax requirements, don't they? Just asking. |
| ewantanner | It would be very difficult for a fund to consider the tax situation of all the individual investors. It is the investor's duty to make sure that the funds strategy matches with their projected tax situations. |
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Learning Outcome Statements
explain investment features of hedge funds and contrast them with other asset classes
describe investment forms and vehicles used in hedge fund investments
CFA® 2025 Level I Curriculum, Volume 5, Module 6.