Higher returns of equity hedge funds as compared to the S&P 500 Index reflect positive compensation for ________ risk.

Question

Quizplus · Accepted Answer

Higher returns of equity hedge funds compared to the S&P 500 Index reflect positive compensation for liquidity risk. This is because hedge funds often invest in less liquid assets or strategies, which require a premium to compensate investors for the additional risk of not being able to quickly or easily sell these investments without a significant price concession.

Higher Returns of Equity Hedge Funds as Compared to the S&P