Understanding Equity Hedge Strategies

Very Easy Hedge Fund Strategies Equity Hedge

Hedge funds utilize various strategies to achieve positive returns, regardless of market conditions. One such strategy is known as 'Equity Hedge,' which generally seeks to invest in stocks while simultaneously hedging against potential declines. This question assesses your understanding of the fundamental characteristics of Equity Hedge strategies.

Which of the following best describes an Equity Hedge strategy?

A strategy that invests exclusively in bonds and other fixed-income securities.

A strategy that combines long positions in stocks with short positions to hedge against market risk.

A strategy that focuses solely on private equity investments.

Hint

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