Gross And Net Exposure

This problem practices a core hedge fund concept, how to interpret portfolio exposure as a measure of leverage versus directional market risk. Candidates need to understand how long and short positions combine, why one measure reflects the total scale of positions in the portfolio, and why the other reflects the portfolio’s remaining sensitivity to market moves. Interviewers ask this because it tests whether you can think clearly about risk, leverage, and how hedge funds manage portfolios rather than just position-level returns.