FINRA Series 6

Category - Series 6

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Which of the following statements about hedge funds is true?

They are fairly low risk since the portfolio managers use investment strategies designed to “hedge their bets.”
They are not regulated by the Investment Company Act of 1940.
They are considered to be very liquid investments.
They have low management fees, like index funds.

Explanation

Answer: B - The true statement about hedge funds is that they are not regulated by the Investment Company Act of 1940. They are very risky, are illiquid-investors may only make contributions and withdrawals at specified times-and they have extremely high management fees.

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FINRA Series 6

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FINRA Series 6

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