Identifying Relative Value Hedge Fund Strategy

Easy Hedge Fund Strategies Relative Value

Consider a hedge fund that employs a relative value strategy in its investment approach. This strategy typically aims to capitalize on pricing inefficiencies between related financial instruments. Relative value strategies can involve various techniques such as statistical arbitrage, convertible arbitrage, and pairs trading.

Which of the following examples best represents a relative value strategy?

Buying a single stock expected to appreciate due to positive earnings growth.

Investing in a long position in one corporate bond while simultaneously shorting a related corporate bond from a similar issuer.

Purchasing real estate properties with the expectation that their values will increase over time.

Hint

Submitted7.3K

Correct5.5K

% Correct76%