SIE practice questionmediumHedge Funds
Which practice is common for hedge funds but not for mutual funds?
- AOffering purchase to all investors regardless of net worth
- BRegulatory registration under the Investment Company Act
- CDaily public pricing of shares
- DUsing leverage and short selling to enhance returns✓ Correct answer
Explanation
Why D — Using leverage and short selling to enhance returns
Hedge funds commonly use strategies such as leverage and short selling that are more restricted for mutual funds. They are not broadly offered to all investors with daily public pricing.
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