CFA Practice Question

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CFA Practice Question

Which of the following statements most accurately describes hedge fund performance issues?

I. Hedge fund data bases often suffer from survivorship bias.
II. Hedge fund reporting is voluntary and unregulated.
III. Individual asset pricing in hedge funds is controlled by the portfolio manager.
Correct Answer: I, II and III

All three statements express issues found with measuring and reporting hedge fund performance.

User Contributed Comments 6

User Comment
mordja because of the lack of regulation there is no involuntary provision of data, such as there is for a listed stock. If you have the option of providing data, you will only do so if it is in your best interests.
schweitzdm Anyone care to provide additional comments on III?
ankurwa10 I don't think III is entirely true. because PMs essentially pick an asset class e.g. real estate. So, if a PM to a Fund that buys real estate on behalf of investors, needs to provide value, it would depend on assessors. Similarly, for fund of funds, it depends on outside managers to provide the valuation. So, overall one can say that since there is no ready made market made price, what PM decides to pay (of course on the basis of available valuation IS the price, thus controlling the price, per the answer)
Inaganti6 in the real exam will you spend your time opining like this....
timkalt If the questions is on "most accurate", I would Chose just one answer. Same opinion anyone?
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