Schweser Volume 2 Exam 2 Question 7B

[matteobona88]

Hey guys, as in the title there is this problem.
We have three managers, A, B and C and one goes long A and C 100% (so 200%) and short 100. This is a clear example o leverage. What is not clear to me i why this is a long-short strategy. They say calling it a long short is more appropriate rather than calling it a short extension because in this case the structure is 200/100 and not 130/30.
Then they move on saying this is not alpha and beta separation (which I agree) becuase it only uses equity and does not shift equity alpha to another market. What does this mean? To me it’s not long-short because market risk still exists.
Do you guys find the questions from Schweser confusing? I feel like I have thrown away my money with their mocks. CFA real exams seem much more straightforward and less assumptions driven.

 

[sdooley23]

I remember that question but for question 7 exam 2 I have a IPS question?
I want to reread the question now but can’t find it….

 

[matteobona88]

Sorry it’s in the 2015 version so they may have mixed up the things … It is the Jens Gustave - BAM - High Grove Foundation case

 

[MrSmart]

That’s a long short strategy. A short extension is also a long-short, but usually a much lower % of your portfolio equitized version. Alpha beta seperation is also a long-short strategy, but gets both from different markets.