Which of the following best describes a hedge fund?

A hedge fund best fits the description of an investment fund that employs various strategies to earn active returns. Unlike traditional investment vehicles, hedge funds are not limited to conventional methods of investing. They utilize a wide array of strategies including long and short positions, leverage, derivatives, and arbitrage, among others. This versatility allows hedge fund managers to capitalize on different market conditions, aiming for higher returns regardless of market direction.

In contrast to other types of funds, hedge funds often require a higher minimum investment and are typically available to accredited investors. The operational flexibility and range of investment strategies enable hedge funds to invest in a broader spectrum of asset classes compared to more structured investment products.

Other options do not accurately capture the essential characteristics of hedge funds. Option A incorrectly implies that hedge funds are strictly regulated, which is not the case; they often face less regulatory oversight than mutual funds. Option B describes a savings account, which fundamentally differs from the investment focus of hedge funds. Lastly, option D mischaracterizes hedge funds as a type of mutual fund focused solely on corporate bonds, which limits the scope of hedge funds' investment strategies.