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. Recovery rate






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






3. Measures sensitivity to changes in currency value






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






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






6. Changes in time






7. 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






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






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






10. Changes in time






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






12. Underlying stock dividend yield






13. Underlying stock dividend yield






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






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






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






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






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






20. Credit spread






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






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






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






24. Definability - Commonality - Tradability






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






26. Measures sensitivity to changes in currency value






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






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






29. Recovery rate






30. 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






31. 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






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






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






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






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






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






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






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






39. 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






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






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






42. 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






43. Credit spread






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






45. Definability - Commonality - Tradability






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