Products & Their RisksQuestion 107 of 398
Hedge funds are typically sold through private placements and are generally limited to:
a.Any retail investor who signs a prospectus
b.Accredited investors and other qualified, sophisticated investors
c.Only tax-exempt charitable organizations
d.Investors under age 59 with an IRA
Explanation
Hedge funds are usually offered privately under Regulation D of the Securities Act of 1933 and are restricted to accredited or otherwise qualified, sophisticated investors who meet income or net-worth standards. This exemption from full registration reflects the funds' complex, higher-risk strategies and limited disclosure.
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