Question #41
Reading: Reading 34 Hedge Fund Strategies
PDF File: Reading 34 Hedge Fund Strategies.pdf
Page: 17
Status: Incorrect
Correct Answer: A
Your Answer: A
Question
Long/short equity funds typically:
Answer Choices:
A. eliminate market exposure through a net beta of zero
B. reduce standard deviation to zero
C. maintain a net long equity exposure of 40–60%
Explanation
Unlike a market neutral approach, long/short approaches maintain a net long equity
position typically between 40% and 60%. The net long equity position would have a
positive beta. Managers aspire to have a standard deviation about half of a long-only
approach.