Sadka (2010) shows that exposure to unexpected declines in ________ is an important determinant of average hedge fund returns, and that the spreads in average returns across funds with the highest and lowest ________ may be as much as 6% annually.

Question

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Sadka (2010) demonstrates that exposure to unexpected declines in market liquidity, not market risk or any form of unique or default risk, significantly influences the average returns of hedge funds. The study highlights the importance of liquidity risk in determining the performance spread among hedge funds.

Sadka (2010) Shows That Exposure to Unexpected Declines in ________