SIE practice questionhardHedge Funds
Why are hedge funds subject to less disclosure and fewer regulations than mutual funds?
- AThey are offered only to accredited or institutional investors✓ Correct answer
- BThey are sold to the general public
- CThey are registered with the SEC as investment companies
- DThey cannot use leverage in their portfolios
Explanation
Why A — They are offered only to accredited or institutional investors
A is correct; hedge funds are exempt from many regulations because investors are presumed sophisticated. B, C, and D are false.
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