Question #23
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
Including which of the following hedge fund strategies in a diversified portfolio is least likely to mitigate drawdowns?
Answer Choices:
A. Global macro
B. Distressed securities
C. Equity market-neutral
Explanation
An explanation for the inability of distressed securities to mitigate drawdowns is the long
time horizon of distressed debt investments and their direct exposure to both equity and
credit risk.