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Test your basic knowledge |
Hedge Funds
Start Test
Study First
Subjects
:
business-skills
,
industries
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
non-investible FoHF
Rho
Beta Overlay Requirement
advantage of FoHF
2. Credit spread
Beta Overlay Econ Risk Factor
Discretionary Global Macro
Omicron
non-investible FoHF
3. Diversification - econ of scale - info adv - liquidity - manager access - lower negotiated fees - lower reg hurdle - currency hedging - pro management
Chi
advantage of FoHF
Gamma
Chi
4. Double fee - performance fee - taxes - limited tranparency - lack of control
phi
Long/Short Strategy
Chi
disadvantage of FoHF
5. Credit spread
Rho
Global Macro Models
Primary Ways FoHF add value
Omicron
6. Underlying stock dividend yield
advantage of FoHF
Systematic Global Macro
phi
non-investible FoHF
7. Measures sensitivity to changes in currency value
Vega
Chi
Beta Overlay Econ Risk Factor
desirable properties of FoHF investible indices
8. Access bias: imposing strict selection criteria on track records - transparency - valuation - AUM
Rho
Vega
Discretionary Global Macro
investible FoHF
9. Measures the convexity of the convertible-stock price relationship
Global Macro Models
Gamma
FoHF Due diligence
investible FoHF
10. Specific nature of security - use of leverage - valuation method - manager skill
Beta Overlay Econ Risk Factor
Global Macro Models
Long/Short Strategy
HF due deligence
11. Measures the convertible's price sensitivity relative to changes in interest rates
HF due deligence
Chi
Rho
Beta Overlay Requirement
12. 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
non-investible FoHF
Omicron
Primary Ways FoHF add value
Long/Short Strategy
13. Carry Trade - Yeild Curve relative value trades - Purchasing Power Parity - Valuation models - option pricing models
investible FoHF
desirable properties of FoHF investible indices
Global Macro Models
Primary Ways FoHF add value
14. No transparency - - non-investible - lack of liquidity - difficult to replicate - report time lag
advantage of FoHF
disadvantage of FoHF
upsilon
non-investible FoHF
15. Background - product info - performance - asset allocation - manager selection - portfolio construction - risk management - admin/op - client reporting - compliance/legal
Primary Ways FoHF add value
FoHF Due diligence
Long/Short Strategy
Chi
16. Access bias: imposing strict selection criteria on track records - transparency - valuation - AUM
5 reasons to hedge liquid risk factors
disadvantage of FoHF
investible FoHF
upsilon
17. Always positive - highest for at the money - measures convertible's price sensitivity relative to changes in stock volatility
Global Macro Models
investible FoHF
Vega
5 reasons to hedge liquid risk factors
18. 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
Discretionary Global Macro
Beta Overlay Requirement
Primary Ways FoHF add value
5 reasons to hedge liquid risk factors
19. Use fundamental first then technical. Technical isn't used for idea generation but for execution of strategy.
Long/Short Strategy
Rho
Discretionary Global Macro
disadvantage of FoHF
20. 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
disadvantage of FoHF
HF due deligence
5 reasons to hedge liquid risk factors
Rho
21. Transparent - verifiable - accountable - investible - reasonable - representative
desirable properties of FoHF investible indices
Theta
investible FoHF
Omicron
22. Idea generation - optimal idea expression - sizing the position - execution - managing risk
Omicron
Theta
upsilon
Long/Short Strategy
23. Measures sensitivity to changes in currency value
Discretionary Global Macro
advantage of FoHF
Vega
Chi
24. Background - product info - performance - asset allocation - manager selection - portfolio construction - risk management - admin/op - client reporting - compliance/legal
Beta Overlay Econ Risk Factor
FoHF Due diligence
upsilon
Gamma
25. 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
Rho
5 reasons to hedge liquid risk factors
desirable properties of FoHF investible indices
non-investible FoHF
26. Measures the convertible's price sensitivity relative to changes in interest rates
Long/Short Strategy
Global Macro Models
Omicron
Rho
27. Measures the convexity of the convertible-stock price relationship
Theta
Gamma
Long/Short Strategy
Vega
28. Double fee - performance fee - taxes - limited tranparency - lack of control
disadvantage of FoHF
Gamma
Theta
Chi
29. Recovery rate
Discretionary Global Macro
upsilon
Systematic Global Macro
Vega
30. Diversification - econ of scale - info adv - liquidity - manager access - lower negotiated fees - lower reg hurdle - currency hedging - pro management
disadvantage of FoHF
Systematic Global Macro
phi
advantage of FoHF
31. Use technical for both idea generation and execution of strategy.
advantage of FoHF
disadvantage of FoHF
Gamma
Systematic Global Macro
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
HF due deligence
Long/Short Strategy
Primary Ways FoHF add value
Vega
33. Definability - Commonality - Tradability
Gamma
Beta Overlay Econ Risk Factor
FoHF Due diligence
Gamma
34. Transparent - verifiable - accountable - investible - reasonable - representative
Rho
desirable properties of FoHF investible indices
Theta
upsilon
35. Use technical for both idea generation and execution of strategy.
Global Macro Models
Long/Short Strategy
desirable properties of FoHF investible indices
Systematic Global Macro
36. Recovery rate
Rho
upsilon
Vega
desirable properties of FoHF investible indices
37. Specific nature of security - use of leverage - valuation method - manager skill
Gamma
Long/Short Strategy
Primary Ways FoHF add value
HF due deligence
38. Carry Trade - Yeild Curve relative value trades - Purchasing Power Parity - Valuation models - option pricing models
Chi
5 reasons to hedge liquid risk factors
Global Macro Models
non-investible FoHF
39. Idea generation - optimal idea expression - sizing the position - execution - managing risk
HF due deligence
FoHF Due diligence
Long/Short Strategy
Rho
40. Always positive - highest for at the money - measures convertible's price sensitivity relative to changes in stock volatility
Beta Overlay Requirement
Vega
Theta
Primary Ways FoHF add value
41. 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
disadvantage of FoHF
Long/Short Strategy
Beta Overlay Requirement
Discretionary Global Macro
42. Use fundamental first then technical. Technical isn't used for idea generation but for execution of strategy.
Global Macro Models
Vega
Discretionary Global Macro
disadvantage of FoHF
43. Changes in time
Omicron
upsilon
Theta
5 reasons to hedge liquid risk factors
44. Changes in time
Theta
advantage of FoHF
HF due deligence
non-investible FoHF
45. Underlying stock dividend yield
Systematic Global Macro
phi
Primary Ways FoHF add value
Discretionary Global Macro
46. Definability - Commonality - Tradability
desirable properties of FoHF investible indices
Beta Overlay Econ Risk Factor
upsilon
upsilon