Which of the following strategies has a goal of offsetting risk by holding opposite positions in pairs of securities?
A)market neutral
B)arbitrage
C)distressed securities
D)macro
E)market timing

Question

Quizplus · Accepted Answer

Market neutral strategies aim to create a portfolio with zero net market exposure, meaning it holds equal long and short positions in pairs of securities. This offsets market risk as gains in one position are offset by losses in the opposite position, and vice versa. Arbitrage strategies aim to profit from price discrepancies between related securities but do not necessarily involve holding opposite positions in pairs of securities. Distressed securities focus on investing in distressed companies with the potential for turnaround, and macro strategies involve making bets on broad economic or market trends. Market timing involves attempting to time market fluctuations to buy and sell securities.

Which of the Following Strategies Has a Goal of Offsetting