SIE practice questioneasyHedge Funds
A major difference between a hedge fund and a mutual fund is that hedge funds:
- AInvest primarily in government bonds
- BAre generally only available to accredited or sophisticated investors✓ Correct answer
- CAre registered under the Investment Company Act of 1940
- DCan be purchased and redeemed daily by the general public
Explanation
Why B — Are generally only available to accredited or sophisticated investors
A is correct; hedge funds are typically limited to accredited investors. B is incorrect—hedge funds can invest in diverse assets. C and D are features of mutual funds, not hedge funds.
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