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Which of the following statements regarding the hedge funds (HFs) are true? I. Similar to mutual funds, HFs charge an annual management fee of 1
Which of the following statements regarding the hedge funds (HFs) are true? I. Similar to mutual funds, HFs charge an annual management fee of 1 to 2% of assets under management. II. On top of the management fees, HF advisors also earn a performance fee (typically 20 to 25% of the earned return) if a certain performance benchmark is met. III. Theoretically, HFs are designed to engage in risk arbitrage strategies, often involving spreads in multiple markets. Therefore, most of HFs adopt low-risk hedging strategies. IV. HFs employ high leverage to take advantage of perceived" mispricings. If markets move in the unexpected direction, HFs can endure huge losses
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