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© 2014 Pearson Canada Inc.#12.6 Hedge Funds
Which of the following is true about hedge funds?
A) Hedge funds are the same as mutual funds.
B) Hedge funds require that investors commit their funds short-term.
C) Hedge funds use strategies that avoid risk.
D) Hedge funds have a minimum investment requirement between $100,000 and $20 million.
Answer: D
Diff: 3 Type: MC Page Ref: 286
Skill: Recall
Objective List: 12.6 Examine the role of hedge funds
Which of the following funds make investments in established businesses?
A) Capital buyout funds
B) Venture capital funds
C) Mutual funds
D) LBO funds
Answer: A
Diff: 1 Type: MC Page Ref: 287
Skill: Recall
Objective List: 12.6 Examine the role of hedge funds
When a publicly traded firm is taken private by buying all of its shares, while financing the
purchase by increasing the debt of the firm, this is called ____.
A) a stock buyout
B) a leveraged buyout
C) a venture buyout
D) a debt buyout
Answer: B
Diff: 1 Type: MC Page Ref: 287
Skill: Recall
Objective List: 12.6 Examine the role of hedge funds
In a private equity fund, investors are also ____.
A) managing partners
B) free-riding partners
C) limited partners
D) general partners
Answer: C
Diff: 1 Type: MC Page Ref: 287
Skill: Recall
Objective List: 12.6 Examine the role of hedge funds