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Trang Tran-Collins
on Nov 04, 2024

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A hedge fund pursuing a ______ strategy is trying to exploit relative mispricing within a market but is hedged to avoid taking a stance on the direction of the broad market.

A) directional
B) nondirectional
C) market neutral
D) arbitrage or speculation
E) nondirectional and market neutral

NonDirectional Strategy

A NonDirectional Strategy in investing focuses on making profits without predicting market directions, often utilizing instruments that can benefit from volatility or arbitrage strategies.

Relative Mispricing

The situation where the price of an asset does not reflect its underlying value when compared to another asset, creating an opportunity for arbitrage.

Market Neutral

A hedged portfolio with no net exposure to market movements.

  • Recognize the nuances and variations in hedge fund strategies such as market neutral, directional, and arbitrage methods.
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Taylor SmithNov 07, 2024
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