gita

 

The correct answer is D

The key to benchmarking returns is to identify the proper alpha. This requires subtracting the risk-free return and any risk premia attributable to risks to which the hedge fund is exposed.

gita

 

2、While traditional assets have benchmarks such as the S& 500, hedge funds do not have such a clear-cut criterion for performance measurement. Where do hedge funds derive the bulk of their returns?

A) Risk premia.

B) Overall economic conditions.

C) Combination of alpha and beta.

D) Alternative risk.

gita

 

The correct answer is A

Hedge funds do derive the majority of their returns from risk premia. Thus these returns are largely dependent on the behavior of global capital markets.