Hedge funds:
A) are typically organized as limited partnerships.
B) hedge funds were accused of making market conditions worse during the credit crisis because they commonly took short positions in the stock of financial institutions that held subprime mortgages.
C) commonly rely heavily on financial leverage.
D) generally charge both a management fee and an incentive fee.
E) All of the above are correct.

Question

Quizplus · Accepted Answer

Hedge funds are typically organized as limited partnerships, they were accused of making market conditions worse during the credit crisis because they commonly took short positions in the stock of financial institutions that held subprime mortgages, commonly rely heavily on financial leverage, and generally charge both a management fee and an incentive fee. Therefore, all of the options given (A, B, C, and D) are correct.

Hedge Funds