Exam ICWIM Topic 1 Question 13 Discussion

Actual exam question for CISI's ICWIM exam
Question #: 13
Topic #: 1
When a hedge fund puts together an equity arbitrage position, it will seek to balance respective:

Suggested Answer: B Vote an answer

Equity arbitrage strategies involve balancing betas to hedge risk while profiting from pricing inefficiencies.
* Key Concept:
* Beta measures systematic risk (market-related risk).
* Equity arbitrage strategies aim to neutralize beta while profiting from pricing anomalies.
* Example:
* A hedge fund buys an undervalued stock and shorts an overvalued stock with matching betas
, ensuring market-neutral exposure.
# Reference: CFA Institute (Hedge Fund Strategies), CISI Wealth & Investment Management.

by Rodney at Feb 17, 2026, 01:25 AM

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