Which of these strategies is generally prohibited for mutual funds but employed by hedge funds?

The strategy that is generally prohibited for mutual funds but commonly employed by hedge funds is taking short positions in NYSE listed stocks. Hedge funds are known for their flexibility and ability to employ a variety of investment strategies, including short selling. This involves borrowing shares of stock to sell them at the current market price with the intent to buy them back later at a lower price, profiting from a decline in the stock's price.

Mutual funds, on the other hand, are subject to stringent regulations designed to protect retail investors, which typically restricts them from short selling. This regulatory framework is in place to maintain a level of stability and investor protection, as short selling can increase market volatility and risk.

The other strategies mentioned, while they may exhibit some limitations in mutual funds, do not encapsulate the significant distinction represented by short selling. For instance, limiting investments to a narrow group of securities can occur in both mutual and hedge fund contexts, as can the use of borrowed money to purchase securities under certain conditions. Taking long positions in speculative stocks is also permissible for mutual funds as long as they adhere to their investment objectives and risk profiles.