Hedge funds are generally considered high risk, even if they use market-neutral strategies, because they often use leverage to amplify their returns, which can also amplify their losses. Additionally, hedge funds typically have fewer regulatory restrictions and disclosure requirements than other types of investment funds, which can contribute to their higher risk profile.

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Hedge Funds Are

Question 24

Multiple Choice

Hedge funds are

A) low risk because they are market-neutral.
B) low risk if they buy Treasury bonds.
C) low risk because they hedge their investments.
D) high risk because they are market-neutral.
E) high risk, even though they may be market-neutral.

Correct Answer: