What is the primary factor that can introduce volatility into an Arbitrage fund's performance? Option: Fluctuations in the stock market, Changes in interest rates, Geopolitical events, The debt component of the portfolio

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What is the primary factor that can introduce volatility into an Arbitrage fund's performance?

Fluctuations in the stock market

Changes in interest rates

Geopolitical events

The debt component of the portfolio

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What is the typical investment strategy for the remaining portion of funds (outside the mandated arbitrage portion) in an Arbitrage fund?

Long-term equity investments

Commodities trading

Real estate investments

Debt funds

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What makes Aggressive Funds less volatile compared to pure Equity Funds?

Government regulations

Fund manager's expertise

Arbitrage opportunities

Diversification into debt instruments

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

"They increase their exposure to high-risk, high-reward securities"

"They hold a significant portion of their assets in cash"

"They allocate funds towards short-term money market instruments and debt securities"

"They suspend trading activities until favorable arbitrage opportunities arise"

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

"Limited growth potential compared to long-term equity investments"

"Complex tax implications due to their hybrid investment approach"

"High susceptibility to market volatility and economic downturns"

"Unpredictable returns due to the dependence on arbitrage opportunities"

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What is considered the 'real arbitrage' in an arbitrage fund, according to the text?

Exploiting price differences between cash and futures markets

The tax advantage of being treated as an equity fund while behaving like a debt fund

Taking advantage of short-term market inefficiencies

Profiting from discrepancies in international markets