A market neutral hedge fund is likely to have ________.

A) various derivative strategies designed to create stability
B) a low beta compared to other equity only investments
C) a beta well above 1.0 compared to other equity investments
D) a beta near 1.0

Market Neutral

An investment strategy aiming to achieve returns independent of the overall market direction by simultaneously buying assets expected to rise and shorting assets expected to fall.

Beta

Beta is a measure of a stock's volatility in relation to the overall market; the market itself has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market.

Derivative Strategies

Derivative strategies involve using financial instruments, such as futures, options, and swaps, to hedge against market risks or to speculate for profit.