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






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






3. Measures sensitivity to changes in currency value






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






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






6. Credit spread






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






8. 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






9. Recovery rate






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






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






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






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






14. Underlying stock dividend yield






15. 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






16. Changes in time






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






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






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






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






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






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






23. 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






24. Credit spread






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






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






27. Recovery rate






28. Changes in time






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






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






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






32. 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






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






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






35. Underlying stock dividend yield






36. 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






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






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






39. Measures sensitivity to changes in currency value






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






41. Definability - Commonality - Tradability






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






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






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






45. 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






46. Definability - Commonality - Tradability