Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) Hedge funds are legal in Europe and Asia,but they are not permitted to operate in the United States.
• B) Hedge funds are legal in the United States,but they are not permitted to operate in Europe or Asia.
• C) Hedge funds have more in common with investment banks than with any other type of financial institution.
• D) Hedge funds have more in common with commercial banks than with any other type of financial institution.
• E) Hedge funds are not as highly regulated as most other types of financial institutions.The justification for this light regulation is that only "sophisticated" investors (i.e. ,those with high net worths and high incomes)are permitted to invest in these funds,and these investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.

---

Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company’s financial condition at a specific time, including assets, liabilities, and shareholders' equity.

Depreciation Methods

Various techniques used to systematically allocate the cost of a tangible asset over its useful life, including straight-line, declining balance, and units of production methods.

Goodwill

An intangible asset representing the excess value paid for a company over its book value, reflecting factors like brand reputation or customer relations.

Classified Balance Sheet

A balance sheet that organizes a company's assets, liabilities, and equity into subcategories for more detailed and understandable financial analysis.