Relative Value Hedge Fund Strategy

Very Easy Hedge Fund Strategies Relative Value

In the world of hedge funds, investment strategies vary widely, and one of the prevalent categories is 'Relative Value'. This strategy seeks to exploit price discrepancies between related financial instruments. Investors in relative value strategies typically take long and short positions in different instruments to capitalize on perceived mispricings.

Which of the following best describes a characteristic of a relative value hedge fund strategy?

It focuses on directional market movements and making profits from the overall trend.

It aims to exploit pricing inefficiencies between related securities by taking long and short positions.

It primarily invests in distressed assets with the expectation of capital recovery.

Hint

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