SIE Understanding Products and Their Risks Practice Question 23

Correct Answer: B

Explanation:

B: A qualified purchaser can be an individual who is a super-accredited investor due to having at least $5 million in invested assets; a trust, if not set up mainly to invest in the fund; or a professional person or firm controlling at least $25 million in invested assets. A hedge fund may only charge performance-based fees to qualified clients, of which a qualified purchaser is a subcategory. An accredited investor, Choice A, has different and somewhat fewer requirements, such as Choices C and D. Accredited investors may invest in a hedge fund if the fund does not plan to charge performance-based fees.