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Exam Series 6 topic 1 question 66 discussion

Actual exam question from FINRA's Series 6
Question #: 66
Topic #: 1
[All Series 6 Questions]

Which of the following is true about a hedge fund?

  • A. It is designed to help investors hedge their risk and, as such, is a low risk alternative to a mutual fund.
  • B. It is closed to all but sophisticated, wealthy investors.
  • C. It is more liquid than almost any investment other than a money market mutual fund.
  • D. It has very low management fees since it is passively managed.
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Suggested Answer: B 🗳️
A hedge fund is closed to all but sophisticated, wealthy investors. Hedge fund managers engage in riskier strategies than mutual fund managers.
They are fairly illiquid; the redemption of shares is restricted. They are actively managed, and management fees are much higher than those charged by other types of funds.
by lolojepu at April 6, 2025, 1:14 a.m.

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