Market neutral bets can result in ______ volatility because hedge funds use ______.A) very low; hedging techniques to eliminate riskB) low; risk management techniques to reduce riskC) considerable; risk management techniques to reduce riskD) considerable; considerable leverage

Question

Market neutral bets can result in ______ volatility because hedge funds use ______.A)  very low; hedging techniques to eliminate riskB)  low; risk management techniques to reduce riskC)  considerable; risk management techniques to reduce riskD)  considerable; considerable leverage

Kavina Patel · Accepted Answer

Final Answer : D, Explanation :  Market neutral bets can result in considerable volatility because hedge funds often use considerable leverage to amplify returns, which can also amplify losses and thus increase volatility.

Market neutral bets can result in volatility because hedge funds use .

A) very low; hedging techniques to eliminate risk
B) low; risk management techniques to reduce risk
C) considerable; risk management techniques to reduce risk
D) considerable; considerable leverage

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