Which of the Following Is a Characteristic of Hedge Funds

question 35

Multiple Choice

Which of the following is a characteristic of hedge funds?

• A) They are generally less restricted in how and where they can make investments.
• B) They are more liquid than mutual fund shares.
• C) They have no limitations on when and how often investment capital can be contributed or removed.
• D) They are more restricted in how and where they can make investments.
• E) They are highly correlated with traditional asset class investments.

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Definitions:

Correlation

An index quantifying how much two or more variables move in conjunction with one another.

Prediction Error

The difference between the observed values and the values predicted by a model.

Absolute Value

The non-negative value of a number without regard to its sign; essentially, it's the distance of a number from zero on the real number line.

Correlation

Correlation is a statistical measure that expresses the extent to which two variables fluctuate together, showing the strength and direction of their relationship.