Q1. Please make the correct statement: The argument that ETFs might exacerbate the volatility of assets in markets ...

Select one:

A. Only applies in a bullish market

B. applies in any market situation (bullish or bearish market)

C. Only applies in a bearish market

Q2. Hedge Funds demand ETF for

Select one:

A. To obtain negative returns

B. To hedge market risk

C. To obtain zero returns

Q3.Financial Times on January 20, 2020 reported: [relevant for question 6]

Pension funds and endowments have been the backbone of the hedge fund industry for much of the past decade. But many of these institutional investors are now turning away from the $3tn-in-assets sector, dismayed by high fees and relatively lacklustre returns.

"We got out of most of the hedge fund portfolio," said Scott Wilson, chief investment officer of the $8.9bn endowment fund at the Washington University in St Louis, Missouri. "We don't want any investment just for the sake of having that investment."

Since Mr Wilson's appointment two years ago the fund has slashed its allocation to hedge funds from about 20 per cent of the portfolio to little over 10 per cent. He plans to rebuild that share to about 15 to 20 per cent over time, but will do so cautiously. "It's not that all hedge funds are bad, but you have to be very careful in the selection process," he said.

6. Which variables are important in the investment selection process?

Select one:

A. fees

B. returns

C. both fees and returns