CFA Level I · CFA Level I Exam · Hedge Funds
Compared with traditional long-only mutual funds, hedge funds are most likely to:
Hedge funds most likely face fewer regulatory restrictions on leverage and short selling than mutual funds. They are lightly regulated, use derivatives and borrowing freely, and often limit redemptions, whereas mutual funds offer daily liquidity and are more restricted.
- Aface fewer regulatory restrictions on leverage and short sellingCorrect
- Bbe required to offer daily redemptions to investors
- Cbe limited to investing in publicly traded securities
Explanation
Hedge funds are typically lightly regulated and can use leverage, short selling and derivatives freely. Mutual funds usually offer daily liquidity, and hedge funds are not limited to public securities, so the other options are wrong.
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