Hedge Funds Report Average Returns in December That Are Higher

question 5

Multiple Choice

Hedge funds report average returns in December that are higher than their average returns in other months.This phenomenon __________.
I.is called the Santa effect
II.often results from over generous valuation of illiquid assets
III.appears stronger for lower-liquidity funds
IV.can be explained by managers' attempts to inflate assets to collect higher performance bonuses

• A) I only
• B) I and II only
• C) I, II, and III only
• D) I, II, III, and IV

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Definitions:

Friendships

A mutual relationship between two people that is built on trust, affection, and support.

Inversely Correlated

A relationship between two variables in which one variable increases as the other decreases.

Negatively Related

A term referring to a type of relationship where an increase in one variable is associated with a decrease in another variable.

Cognitive Dissonance

Cognitive dissonance is the mental discomfort experienced when holding two or more conflicting beliefs, attitudes, or values, often leading to changes in beliefs or attitudes to reduce the discomfort.