Question

Differences between hedge funds and mutual funds are that

A. hedge funds are only subject to minimal SEC regulation.
B. hedge funds are typically open only to wealthy or institutional investors.
C. hedge funds managers can pursue strategies not available to mutual funds such as short selling, heavy use
of derivatives, and leverage.
D. are commonly structured as private partnerships.
E. all of the above

Answer 1

Difference between Mutual Funds and Hedge Funds

Basis	Mutual Funds	Hedge Funds
Definition	A professionally managed funds, which pool money from large number of investors to buy a basket of stocks at attractive price.	It also professionally managed fund but pools money from accredited or High net worth individuals’ investor to buy risky assets which can provide higher return
Regulation	High SEC regulations	Minimal SEC Regulations
Investors	Retail investor with limited income	High net worth individuals, intuitional investors
Strategies	Buy and hold	Short sell, speculative position in derivatives, high risk leverage
Transparency	Annual reports published to Public	Reports shared with only investors.
Fund Manager contribution	No mandatory contribution	Substantial investment of personal money, it is kind of limited partnership arrangements.

Thus, Option-E (all of the above) is Correct.