Which of the Following Statements About Hedge Funds Is Not

question 53

Multiple Choice

Which of the following statements about hedge funds is not true?

• A) They sell shares to wealthy individuals and financial institutions.
• B) They charge high management fees.
• C) They require a large initial investment.
• D) They are exposed to very little risk.

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Definitions:

Activity Level

Pertains to the volume or quantity of work performed or services provided, often related to the operational capacity of a business or project.

Relevant Range

The range of activity or volume over which the assumptions about fixed and variable cost behavior are valid.

Variable Costs

Costs that change in proportion to the level of production or business activity.

Committed Fixed Costs

Expenses that a company has committed to pay over a period, which do not vary with the level of production or sales.