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2、Which of the following statements regarding the difference between hedge funds and mutual funds is TRUE?

A) Hedge funds have fewer restrictions on short selling securities compared to mutual funds.

B) While anyone can invest in mutual funds, qualified hedge fund investors must have a net worth of $1 million.

C) Unlike hedge funds, mutual funds are unable to use leverage.

D) Mutual funds tend to hold fewer securities than hedge funds.

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The correct answer is A

Hedge funds have no constraints on short selling. The other statements are all incorrect. Hedge fund portfolios are more concentrated, which implies that they tend to hold fewer securities. Mutual funds are able to use leverage, but the application of leverage is limited. Qualified hedge fund investors must have a net worth of $5 million.


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3、Which of the following statements concerning comparisons between hedge funds and mutual funds is most accurate?

A) Hedge funds tend to spread their holdings across more securities than mutual funds.

B) Mutual funds tend to invest according to a specific investment approach while hedge funds do not.

C) Mutual funds are restricted from using any leverage in their portfolios, while hedge funds use leverage extensively.

D) Hedge funds cannot advertise in order to solicit new funds, while mutual funds can make advertisements to the general public.

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