Answer: a net long exposure of 40%–60%.

## Explanation Long/short equity hedge fund strategies typically maintain a **net long exposure of 40%–60%**. This means that after offsetting long and short positions, the overall market exposure remains moderately positive. ### Why Option A is Correct: - Long/short equity funds typically maintain a net long bias, meaning their long positions exceed their short positions - The 40%–60% net long exposure range is characteristic of these strategies - This moderate net exposure allows them to capture market upside while hedging downside risk ### Why Option B is Incorrect: - If gross short exposure were more than double gross long exposure, the fund would have a net short position - Long/short equity funds typically have net long exposure, not net short ### Why Option C is Incorrect: - While hedge funds can have different risk profiles, the standard deviation is not typically more than double that of long-only funds - Long/short strategies often aim to reduce volatility compared to long-only strategies through hedging - The risk reduction from short positions typically lowers, not increases, standard deviation Long/short equity strategies aim to generate returns from both long positions in undervalued securities and short positions in overvalued securities, while maintaining a net long exposure to capture overall market appreciation.

Author: LeetQuiz Editorial Team