What Strategy Might a Hedge Fund Use to Take Advantage

question 24

Multiple Choice

What strategy might a hedge fund use to take advantage of positive alpha in a long equity position?

• A) short sell the security with positive alpha
• B) leverage and use the proceeds to go long in the alpha security
• C) create a neutral position and gain from the alpha value increase
• D) reduce reliance on margin

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Definitions:

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Economic Efficiency

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