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






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






3. Definability - Commonality - Tradability






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






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






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






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






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






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






10. 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






11. Measures sensitivity to changes in currency value






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






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






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






15. Measures sensitivity to changes in currency value






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






17. 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






18. Credit spread






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






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






21. Underlying stock dividend yield






22. Definability - Commonality - Tradability






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






24. 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






25. Changes in time






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






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






28. 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






29. 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






30. Underlying stock dividend yield






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






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






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






34. Changes in time






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






38. Recovery rate






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






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






41. Recovery rate






42. Credit spread






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






44. 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






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






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