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






2. 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






3. 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






4. 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






5. Definability - Commonality - Tradability






6. Underlying stock dividend yield






7. Definability - Commonality - Tradability






8. Recovery rate






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






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






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






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






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






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






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






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






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






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






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






22. Measures sensitivity to changes in currency value






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






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






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






26. 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






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






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






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






30. Credit spread






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






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






33. Changes in time






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






35. Recovery rate






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






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






38. Underlying stock dividend yield






39. 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






40. Changes in time






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






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






43. Measures sensitivity to changes in currency value






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






46. Credit spread