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






2. Credit spread






3. Underlying stock dividend yield






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






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






6. Measures sensitivity to changes in currency value






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






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






9. Recovery rate






10. 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






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






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






13. Credit spread






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. 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






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






17. 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






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






19. Measures sensitivity to changes in currency value






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






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






22. Changes in time






23. Definability - Commonality - Tradability






24. Underlying stock dividend yield






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






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






27. 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






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






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






30. 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






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






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






33. Definability - Commonality - Tradability






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






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






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






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






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






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






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






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






42. Changes in time






43. Recovery rate






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






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






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