A Hedge Fund Pursuing a ______ Strategy Is Attempting to Exploit

question 43

Multiple Choice

A hedge fund pursuing a ______ strategy is attempting to exploit temporary misalignments in relative pricing.

• A)directional
• B)nondirectional
• C)stock or bond
• D)arbitrage or speculation
• E)none of the above

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Definitions:

Cash Break-Even

The amount of revenue necessary to cover all cash operating expenses, ignoring non-cash costs.

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent, salaries, and insurance.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the percentage of fixed costs in a company's cost structure.

Financial Break-Even

The point at which total revenues and total expenses are equal, leading to a net income of zero.