Concept Checker Answers

1. A In the United States, funds with fewer than 15 investors do not have to register with the

SEC. Having several funds will reduce the number of clients per fund to avoid regulation.

2. B Mutual funds usually use a percent of assets under management approach, which is symmetric. Hedge funds usually give compensation only when there is a gain, which is asymmetric.

3. A All of the actions listed in Choice A are reasons that diversification can be difficult for hedge fund investors.

4. A Since hedge funds can engage in a variety of strategies, their activities should increase efficiency, but there has not been a study to document this.

5. C Investments in hedge funds more than tripled in this time period, and the investments in mutual funds increased by less than one-third.

Lessons From The Intelligent Investor

Lessons From The Intelligent Investor

If you're like a lot of people watching the recession unfold, you have likely started to look at your finances under a microscope. Perhaps you have started saving the annual savings rate by people has started to recover a bit.

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