SIE practice questionhardHedge Funds - Strategies
Which strategy is most likely to be employed by a hedge fund but not by a mutual fund?
- ALong-only investment in equities
- BShort selling and leveraging portfolio assets✓ Correct answer
- CPassive index tracking
- DDiversification
Explanation
Why B — Short selling and leveraging portfolio assets
Hedge funds use leverage and short selling actively, which mutual funds seldom do. B, C, and D are common to both mutual and hedge funds.
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