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. Credit spread






2. 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






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






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






5. Changes in time






6. 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






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






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






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






10. Credit spread






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






12. Recovery rate






13. Definability - Commonality - Tradability






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






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






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






17. Underlying stock dividend yield






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






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






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






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






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






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






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






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






26. 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






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






28. Measures sensitivity to changes in currency value






29. Changes in time






30. Measures sensitivity to changes in currency value






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






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






33. Underlying stock dividend yield






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






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






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






37. Recovery rate






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






39. Definability - Commonality - Tradability






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






41. 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






42. 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






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






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






45. 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






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