Finra Exam Series-6 Topic 1 Question 47 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 47
Topic #: 1

[All Series-6 Questions]

Which of the following statements about hedge funds is true?

AThey are fairly low risk since the portfolio managers use investment strategies designed to ''hedge their bets.''

BThey are not regulated by the Investment Company Act of 1940.

CThey are considered to be very liquid investments.

DThey have low management fees, like index funds.

Show Suggested Answer

Suggested Answer: B

The true statement is that reinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation. The rights of accumulation are not something that all mutual funds with front-end loads must offer. There is no time limit on the accumulation period. The rights of accumulation and the letter of intent are two separate animals; neither has anything to do with the other.

by Hoa at Aug 24, 2022, 11:51 PM

Limited Time Offer

25%

Off

Get Premium Series-6 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Mitzie

1 months ago

These hedge fund questions always make me laugh. It's like they're trying to trick you with the answer choices!

upvoted 0 times

Lenora

1 days ago

C) They are considered to be very liquid investments.

upvoted 0 times

...

Willard

3 days ago

B) They are not regulated by the Investment Company Act of 1940.

upvoted 0 times

...

Pansy

16 days ago

A) They are fairly low risk since the portfolio managers use investment strategies designed to ''hedge their bets.''

upvoted 0 times

...

Johnetta

2 months ago

Ha, low management fees? Hedge funds are notorious for their high fees! Option D is clearly incorrect.

upvoted 0 times

Loren

1 days ago

C) They are considered to be very liquid investments.

upvoted 0 times

...

Audry

2 days ago

B) They are not regulated by the Investment Company Act of 1940.

upvoted 0 times

...

Lashaunda

5 days ago

C) They are considered to be very liquid investments.

upvoted 0 times

...

Dan

6 days ago

B) They are not regulated by the Investment Company Act of 1940.

upvoted 0 times

...

Minna

1 months ago

A) They are fairly low risk since the portfolio managers use investment strategies designed to ''hedge their bets.''

upvoted 0 times

...

Ira

1 months ago

A) They are fairly low risk since the portfolio managers use investment strategies designed to 'hedge their bets.'

upvoted 0 times

...

Sena

2 months ago

Option C is definitely not true. Hedge funds are known for their lack of liquidity compared to other investments.

upvoted 0 times

Karon

1 months ago

B) They are not regulated by the Investment Company Act of 1940.

upvoted 0 times

...

Karon

2 months ago

A) They are fairly low risk since the portfolio managers use investment strategies designed to ''hedge their bets.''

upvoted 0 times

...

Miesha

2 months ago

I'm not sure about the 'low risk' part in option A. Hedge funds can actually be quite risky, depending on the investment strategies they use.

upvoted 0 times

Becky

19 days ago

User 4: That's true, they have more flexibility in their investments.

upvoted 0 times

...

Miesha

25 days ago

User 3: Option B is true, hedge funds are not regulated like other investment companies.

upvoted 0 times

...

Laura

1 months ago

User 2: I agree, it's important to research the specific strategies used.

upvoted 0 times

...

Barney

2 months ago

User 1: I think option A is misleading, hedge funds can be risky.

upvoted 0 times

...

Jin

2 months ago

But hedge funds are known for their high management fees, so I still think A is correct.

upvoted 0 times

...

Chauncey

2 months ago

Option B seems to be the correct answer. Hedge funds are not regulated by the Investment Company Act of 1940, unlike mutual funds.

upvoted 0 times

...

Zita

2 months ago

I disagree, I believe the answer is B.

upvoted 0 times

...

Jin

3 months ago

I think the answer is A.

upvoted 0 times

...