- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 1. Alternative Investment Features, Methods, and Structures
- Subject 3. Investment and Compensation Structures
CFA Practice Question
Which factor does NOT magnify losses for hedge funds? A. Redemptions
B. Margin trading
C. Lockup periods
Correct Answer: C
Hedge funds restrict redemptions so that the fund manager is not forced to sell or close out positions when it would be detrimental simply because investors are panicking.
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