Question #42
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
Distressed security investing generally:
Answer Choices:
A. involves shorting the securities of the distressed firm
B. produces lower returns than other event-driven strategies
C. uses low leverage
Explanation
Given the illiquidity and inherent risk of distressed securities, the strategy is typically
employed with low leverage. Long investments are more common that shorting strategies,
and average returns are generally high.