Answer: event-driven strategy.

## Explanation This question tests knowledge of hedge fund strategies classification. **Key Concepts:** 1. **Event-Driven Strategy**: This strategy seeks to profit from corporate events such as mergers, acquisitions, bankruptcies, restructurings, or other significant corporate actions. The strategy involves analyzing companies that are likely to undergo such events and taking positions to benefit from the price movements that result from these events. 2. **Macro Strategy**: Focuses on broad economic trends and macroeconomic factors across countries or regions, such as interest rates, currency movements, or economic policies. 3. **Relative Value Strategy**: Involves taking positions in related securities where the prices are expected to converge or diverge, such as pairs trading, convertible arbitrage, or fixed income arbitrage. **Why B is Correct:** Investing in companies that are likely to be acquired specifically targets a corporate event (acquisition/merger). This is a classic example of an event-driven strategy, where the investment thesis is based on the occurrence of a specific corporate event rather than broader economic trends or relative mispricings between securities. **Why A is Incorrect:** Macro strategies focus on broad economic trends and are not specifically tied to individual corporate events like acquisitions. **Why C is Incorrect:** Relative value strategies focus on price relationships between related securities, not on corporate events like acquisitions. **Additional Context:** Event-driven strategies can be further subdivided into: - **Merger arbitrage**: Investing in companies involved in announced mergers - **Distressed securities**: Investing in companies undergoing financial distress or restructuring - **Special situations**: Investing in companies undergoing other corporate events The described strategy of investing in companies *likely* to be acquired (pre-announcement) would typically fall under special situations within event-driven strategies.

Author: LeetQuiz .