Hedge Fund Managers Today Construct a Portfolio with a Beta

question 5

Multiple Choice

Hedge fund managers today construct a portfolio with a beta that:

• A)is lower in rising markets and a higher in falling markets.
• B)is higher in rising markets and lower in falling markets.
• C)is market neutral.
• D)is not relevant.

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Definitions:

Spending Legislation

Legislation that dictates how government funds are to be spent, often detailing specific allocations for public sector initiatives and programs.

Negative Externalities

Economic activities that impose a negative effect on an unrelated third party, such as pollution from a factory affecting nearby residents.

Public Choice Economist

An economist who applies economic theories and methodologies to analyze and understand political behavior and decisions, particularly in the context of public policy and government actions.

Rent-Seeking Behavior

Actions by individuals or firms to obtain economic gains through manipulation or exploitation of the political or social environment, rather than through productive economic activity.