SIE Exam Dumps | Which of the following responses describes a common feature of a hedge fund?

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Question 49/80

Which of the following responses describes a common feature of a hedge fund?

A. Low liquidity for investors

B. Low minimum investment requirement

C. Primarily focused on fixed income investments

D. Transparent as to the underlying investments and strategies

Correct Answer: A

Step by Step Explanation:
* Low Liquidity: Hedge funds often impose lock-up periods and restrict redemptions, leading to low liquidity for investors.
* Incorrect Options:
* B: Hedge funds typically have high minimum investment requirements, often $1 million or more.
* C: Hedge funds employ diverse strategies, not just fixed income.
* D: Hedge funds are generally opaque about their strategies and holdings to protect their competitive advantage.
References:
* SEC Investor Bulletin on Hedge Funds: SEC Hedge Funds.

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