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






2. Underlying stock dividend yield






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






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






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






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






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






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






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






10. Recovery rate






11. Measures sensitivity to changes in currency value






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






13. Credit spread






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






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






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






17. 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






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






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






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






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






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






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. Definability - Commonality - Tradability






25. Credit spread






26. 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






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. Changes in time






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






30. Underlying stock dividend yield






31. 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






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






33. Recovery rate






34. Definability - Commonality - Tradability






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






36. Changes in time






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






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






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






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






41. 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






42. Measures sensitivity to changes in currency value






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






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






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






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