Which of the following scenarios will bring a loss

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A hedge fund buys the higher priced share A and short sells the lower priced share B for the same exposure.

Which of the following scenarios will bring a loss?

A.The increase in price A is smaller than the increase in price B.

B.As its name suggests, a hedge fund cannot lose with this type of strategy.

C.The spread between the two securities increases.

D.Price A increases and price B decreases.

E.The decrease in price A is smaller than the decrease in price B.

Reference no: EM132769921

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