Question
In convertible bond arbitrage, what position pairing defines the strategy?
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Answer
Long convert, short underlying stock.
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Question
In merger arbitrage, what position pairing defines the strategy?
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Answer
Long target, short acquirer.
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Question
If reported hedge fund volatility looks unusually low, what appraisal issue from alternatives should you suspect?
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Answer
True volatility may be understated by smoothed pricing.
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Question
Why should you be skeptical of hedge fund diversification claims in stressed markets?
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Answer
Correlations often rise in stress, reducing diversification benefits.
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