CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

The key feature of market-neutral hedge funds is ______

A. the low correlation between their returns and traditional assets'.
B. the take bet on the direction of a market.
C. that they buy stocks that they think will move up and sell stocks that they think will move down.
Correct Answer: A

This strategy attempts to eliminate the overall market movement.

User Contributed Comments 3

User Comment
nachaparia anyone care to explain why its A ???
rcoyne Market-Neutral = Hedged against overall market moves
B is eliminated because a bet on market direction is directly exposed to market moves. C should also be eliminated because buying winners/selling losers does not hedge overall market conditions (recessions hurt winners as well as losers)
joeclark Check Alternative Investment's reading. That is one of the feature of Hedge Funds.
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