Test your basic knowledge |

Hedge Funds

Instructions:
  • Answer 46 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Transparent - verifiable - accountable - investible - reasonable - representative






2. Measures the convexity of the convertible-stock price relationship






3. Tactical: skillful asset allocation based on changing market - Strategic: provide long term direction - Manager Selection: primary source - decide Which manager to use how much to allocation






4. Always positive - highest for at the money - measures convertible's price sensitivity relative to changes in stock volatility






5. Use technical for both idea generation and execution of strategy.






6. Factors have futures and forwards readily available thus easiest to hedge - a significant source of risk - great volatility in risk over time - common among investor portfolios - investor chose investment based on alpha thus removing beta should be o






7. No transparency - - non-investible - lack of liquidity - difficult to replicate - report time lag






8. Factors have futures and forwards readily available thus easiest to hedge - a significant source of risk - great volatility in risk over time - common among investor portfolios - investor chose investment based on alpha thus removing beta should be o






9. Recovery rate






10. Measures the convexity of the convertible-stock price relationship






11. Specific nature of security - use of leverage - valuation method - manager skill






12. Specific nature of security - use of leverage - valuation method - manager skill






13. Measures sensitivity to changes in currency value






14. Definability - Commonality - Tradability






15. Use technical for both idea generation and execution of strategy.






16. Expected return of factor is negative - Benefit exceeds cost of positive return - Preexisting exposure - Risk factor is a by product of return and create great variation in return - Significant portion of variability can be explained by variation in






17. Use fundamental first then technical. Technical isn't used for idea generation but for execution of strategy.






18. Idea generation - optimal idea expression - sizing the position - execution - managing risk






19. Use fundamental first then technical. Technical isn't used for idea generation but for execution of strategy.






20. Definability - Commonality - Tradability






21. Changes in time






22. Tactical: skillful asset allocation based on changing market - Strategic: provide long term direction - Manager Selection: primary source - decide Which manager to use how much to allocation






23. Background - product info - performance - asset allocation - manager selection - portfolio construction - risk management - admin/op - client reporting - compliance/legal






24. Carry Trade - Yeild Curve relative value trades - Purchasing Power Parity - Valuation models - option pricing models






25. Recovery rate






26. Carry Trade - Yeild Curve relative value trades - Purchasing Power Parity - Valuation models - option pricing models






27. Measures the convertible's price sensitivity relative to changes in interest rates






28. Double fee - performance fee - taxes - limited tranparency - lack of control






29. Diversification - econ of scale - info adv - liquidity - manager access - lower negotiated fees - lower reg hurdle - currency hedging - pro management






30. Expected return of factor is negative - Benefit exceeds cost of positive return - Preexisting exposure - Risk factor is a by product of return and create great variation in return - Significant portion of variability can be explained by variation in






31. Underlying stock dividend yield






32. No transparency - - non-investible - lack of liquidity - difficult to replicate - report time lag






33. Underlying stock dividend yield






34. Measures sensitivity to changes in currency value






35. Always positive - highest for at the money - measures convertible's price sensitivity relative to changes in stock volatility






36. Access bias: imposing strict selection criteria on track records - transparency - valuation - AUM






37. Diversification - econ of scale - info adv - liquidity - manager access - lower negotiated fees - lower reg hurdle - currency hedging - pro management






38. Transparent - verifiable - accountable - investible - reasonable - representative






39. Double fee - performance fee - taxes - limited tranparency - lack of control






40. Measures the convertible's price sensitivity relative to changes in interest rates






41. Credit spread






42. Background - product info - performance - asset allocation - manager selection - portfolio construction - risk management - admin/op - client reporting - compliance/legal






43. Changes in time






44. Credit spread






45. Idea generation - optimal idea expression - sizing the position - execution - managing risk






46. Access bias: imposing strict selection criteria on track records - transparency - valuation - AUM