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. 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. Credit spread






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






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






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






7. Underlying stock dividend yield






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






9. Changes in time






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






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






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






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






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






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






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






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






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






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






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






21. Recovery rate






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






23. 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






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






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






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






27. Measures sensitivity to changes in currency value






28. Definability - Commonality - Tradability






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






30. Recovery rate






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. Underlying stock dividend yield






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






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






35. Changes in time






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






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






38. Credit spread






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






40. Measures sensitivity to changes in currency value






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






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






43. 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






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






45. 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






46. Definability - Commonality - Tradability