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. Underlying stock dividend yield






2. Credit spread






3. Measures sensitivity to changes in currency value






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






5. 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






6. Changes in time






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






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






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






10. Changes in time






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






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






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






14. 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






15. Underlying stock dividend yield






16. 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






17. Credit spread






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






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






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






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






22. 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






23. Recovery rate






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






25. Measures sensitivity to changes in currency value






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






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






29. Recovery rate






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






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






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






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






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






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






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






37. Definability - Commonality - Tradability






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






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






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






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






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






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






44. 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






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






46. Definability - Commonality - Tradability