PART A: MULTIPLE-CHOICE QUESTIONS

If a hedge fund manager focuses on short-selling of stocks, he would

_____

A)Invest in company stock for short-term profits

B)Borrow money to invest in stocks

C)Invest in companies with high future growth prospects

D)Select companies where the future supply of securities may exceed demand

Hedge funds often seek to take advantage of market inefficiencies such as

_____

A)High transaction costs

B)Pricing differentials between derivative contracts and the underlying security

C)Similar prices in different geographic locations

D)Technological developments aiding informational efficiencies