SIE Understanding Products and Their Risks Question 92: Answer and Explanation

Question: 92

Which of the following assists the investor in obtaining a return that is opposite of that of a target index?

• A. Inverse hedge fund
• B. Inverse mutual fund
• C. Inverse Real Estate Investment Trust (REIT)
• D. Inverse Exchange-Traded Fund (ETF)

Correct Answer: D

Explanation:

D: Choice D is correct, as inverse ETFs assist in providing a positive return when the target index has a negative return. Choices A, B, and C are incorrect as they are entities, and therefore are not subject to inverse arrangements, except by holding inverse ETFs, inverse options, or other inverse investments in their portfolios.