36. How do Fung \& Hsieh propose investors address the shortcomings of hedge fund indices? A. Use Principal Component Analysis to create "pure style indices" B. Look directly at the investment experience of hedge-fund investors using funds of hedge funds instead C. Only use investable hedge fund indices rather than broad indices. D. Replicate hedge fund returns using look-back straddles. 37. Which of the following biases might help to explain why investable hedge fund indices have to date significantly underperformed broader non-investable indices? A. Instant History Bias B. Selection Bias C. Survivorship Bias D. Look-back Bias 38. Which of the following was one of Philippe Jorion's conclusions about LTCM? A. The collapse of LTCM should be taken as an indictment of VAR systems B. The Fed should not have stepped in to organise a bail-out C. The events of 1998 were beyond the fund's capacity to anticipate D. LTCM's strategy exploited the intrinsic weakness of its risk management system. 39. Which of the following red flags would have been highlighted by a thorough due diligence analysis of Bayou Capital Management? A. Bayou's trading activity was conducted by its own brokerage arm. B. The auditor was not an established audit firm. C. The principals were fined by regulators on 2 separate occasions. D. All of the above