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Consider the following statements in regard to Hedge funds:
(1) Hedge funds are open to all types of investors.
(2) Hedge funds are immune to risk of the market and always produce positive returns.
(3) Hedge funds are not sold the public or retail investors.
Which of the statements given above is/are correct?
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- 1 only
- 1 and 2 only
- 2 and 3 only
- 3 only
Correct Option: D
Hedge funds invest in a diverse range of markets and use a wide variety of investment styles and financial instruments. Hedge funds are open only to certain types of investors in a country specified by the regulator and cannot be offered or sold to be general public. They reduce the level of risk attached to the investment but they are not immune to it.
