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






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






3. Recovery rate






4. 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






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






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. Measures the convexity of the convertible-stock price relationship






8. Measures sensitivity to changes in currency value






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






10. Recovery rate






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






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






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






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






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






16. Measures sensitivity to changes in currency value






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






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






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






20. 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






21. 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






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






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






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






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






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






27. 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






28. 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






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






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






31. Changes in time






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






33. Credit spread






34. Definability - Commonality - Tradability






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






36. Underlying stock dividend yield






37. Underlying stock dividend yield






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






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






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






41. Credit spread






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






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






44. Changes in time






45. Definability - Commonality - Tradability






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