- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 6. Hedge Funds
- Subject 2. Hedge Fund Investment Risk, Return and Diversification
CFA Practice Question
Which type of hedge funds typically has a low standard deviation?
B. Arbitrage-based funds.
C. Global macro funds.
A. Market neutral funds.
B. Arbitrage-based funds.
C. Global macro funds.
Correct Answer: B
They are the hedge funds that explicitly hedge.
User Contributed Comments 2
| User | Comment |
|---|---|
| ankurwa10 | Did not get this. should this not be true for market neutral funds. Intuitively, it should end up giving you what the market makes? |
| birdperson | market-neutral shoot for a beta of 0, so if they make what the market makes (which has beta of 1) it would be a solid investment (considering its role in a portfolio) |