Question

Hedge funds are generally illiquid investments with high minimum purchase requirements. Most are offered under Regulation D, which requires individual purchasers to meet minimum income and liquid net worth requirements.

A. True
B. False

Answer 1

Hedge funds are generally illiquid investments with high minimum purchase requirements. Most are offered under Regulation D, which requires individual purchasers to meet minimum income and liquid net worth requirements. Unlike mutual funds, hedge funds are typically only available to accredited investors who meet specific income and net worth criteria.

Step-by-step explanation:

Hedge funds are generally illiquid investments with high minimum purchase requirements. Most hedge funds are offered under Regulation D, which requires individual purchasers to meet minimum income and liquid net worth requirements.

Unlike mutual funds, hedge funds are typically only available to accredited investors who meet specific income and net worth criteria. This exclusivity and minimum requirement make hedge funds illiquid investments with limited accessibility.

To illustrate, let's consider an example:

1. An individual wants to invest in a hedge fund that requires a minimum investment of $1 million.
2. The individual must meet the minimum income and liquid net worth requirements set by Regulation D, such as having a certain level of income or a minimum amount of assets.
3. If the individual doesn't meet these requirements, they cannot invest in the hedge fund.