What is the primary investment strategy of Arbitrage Mutual Funds?

"Investing in undervalued assets for long-term growth" "Identifying and exploiting price discrepancies of securities across different markets" "Focusing on short-term debt instruments to generate consistent returns" "Investing in high-growth startups with significant potential"

What is a key characteristic that distinguishes Arbitrage Funds from traditional investment approaches?

"They prioritize long-term capital appreciation over short-term gains" "They involve simultaneous buying and selling of the same security to profit from price differences" "They primarily focus on investing in fixed-income securities for stable returns" "They heavily rely on market sentiment analysis for investment decisions"

In the absence of suitable arbitrage opportunities, how do Arbitrage Funds typically manage their investments?

"They hold a significant portion of their assets in cash" "They increase their exposure to high-risk, high-reward securities" "They allocate funds towards short-term money market instruments and debt securities" "They suspend trading activities until favorable arbitrage opportunities arise"

How are Arbitrage Mutual Funds generally categorized in terms of risk?

"High-risk investments due to their active trading strategies" "Moderate-risk investments as they balance equity and debt holdings" "Low-risk investments as they aim to minimize exposure to market fluctuations" "Variable-risk investments depending on the specific arbitrage opportunities pursued"

What is a potential drawback of investing in Arbitrage Mutual Funds?

"Limited growth potential compared to long-term equity investments" "High susceptibility to market volatility and economic downturns" "Unpredictable returns due to the dependence on arbitrage opportunities" "Complex tax implications due to their hybrid investment approach"

How are Arbitrage Mutual Funds taxed in relation to equity funds?

"They are taxed at a lower rate than equity funds due to their lower risk profile" "They are taxed differently due to their inclusion of both debt and equity instruments" "They are taxed similarly to equity funds as they primarily invest in equities" "They are exempt from capital gains tax due to their short-term investment horizon"