Chartered Investment Manager (CIM) Practice Exam · Question
A Canadian investment advisor is evaluating a new 'long/short equity' hedge fund for their high-net-worth client. The fund's strategy involves taking long positions in undervalued equities and short positions in overvalued equities. This approach is best described as an example of which hedge fund strategy?
Equity Market Neutral strategies aim to profit from security mispricings while neutralizing exposure to market-wide price movements by taking offsetting long an
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Question: A Canadian investment advisor is evaluating a new 'long/short equity' hedge fund for their high-net-worth client. The fund's strategy involves taking long positions in undervalued equities and short positions in overvalued equities. This approach is best described as an example of which hedge fund strategy?
Answer options: ✅ Equity Market Neutral
- Global Macro
- Event-Driven
- Fixed Income Arbitrage
Correct answer: Equity Market Neutral
Explanation: Equity Market Neutral strategies aim to profit from security mispricings while neutralizing exposure to market-wide price movements by taking offsetting long and short positions in the same or related sectors.
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