Question #22
Reading: Reading 34 Hedge Fund Strategies
PDF File: Reading 34 Hedge Fund Strategies.pdf
Page: 9
Status: Incorrect
Correct Answer: B
Your Answer: B
Question
Institutional limitations on banks and insurance companies are most likely to lead to pricing inefficiencies in which type of strategy?
Answer Choices:
A. Volatility trading
B. Distressed securities
C. Global macro
Explanation
Limits to hold-only investment-grade debt by banks and insurance companies may lead to
pricing inefficiencies for distressed securities, which can be capitalized upon. While there
may be other limitations concerning macro and volatility strategies, the questions
specifically asks about pricing inefficiencies.