Statistical Arbitrage Is a Version of a ______ Strategy

question 9

Multiple Choice

Statistical arbitrage is a version of a ______ strategy.

• A) market neutral
• B) directional
• C) relative value
• D) divergence
• E) convergence

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Definitions:

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.

Firm Commitment

An agreement between a buyer and an underwriter in which the underwriter guarantees the sale of a certain amount of securities.

Cash Flow Hedge

A hedging strategy used to manage risk associated with variability in cash flows, typically related to interest rates or currency exchange rates.

Inventory Purchase

The process of acquiring goods that a company will sell to customers or use in the production of goods to be sold.