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. Changes in time






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






4. Recovery rate






5. Measures sensitivity to changes in currency value






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






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






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






9. 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






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






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






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






13. Definability - Commonality - Tradability






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






15. Credit spread






16. 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






17. Definability - Commonality - Tradability






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






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






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






21. 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






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






23. 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






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






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






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






27. Underlying stock dividend yield






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






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






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. Changes in time






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






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






34. Underlying stock dividend yield






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






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






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






38. Measures sensitivity to changes in currency value






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






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






41. 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






42. Credit spread






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






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






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






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