Positions are not always risk-free and can be quite volatile even if they are market-neutral, nondirectional, and hedged. multiple-choice query market-neutral nondirectional arbitrages with hedges
A market-neutral fund is a type of hedge fund that makes money whether the market is going up or down, generally by using matched long and short positions or derivatives. As they aim to produce profitable returns in all market conditions, these funds may help to reduce market risk.
Because they are concentrated on absolute returns rather than relative returns, hedge funds frequently adopt a market-neutral approach.
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