Identifying Characteristics of Relative Value Hedge Fund Strategies

Very Easy Hedge Fund Strategies Relative Value

Mark is reviewing different hedge fund strategies for his investment portfolio and is particularly interested in relative value strategies. These strategies typically involve taking long and short positions in related securities to exploit pricing inefficiencies. Which of the following options best describes a characteristic of relative value hedge fund strategies?

They primarily focus on market timing and macroeconomic trends.

They seek to profit from the price differential between related instruments.

They aim to invest in distressed assets without regard to financial metrics.

Hint

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