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. 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






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






3. Changes in time






4. Definability - Commonality - Tradability






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






6. Underlying stock dividend yield






7. Definability - Commonality - Tradability






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






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






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






11. Underlying stock dividend yield






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






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






14. Credit spread






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






16. Measures sensitivity to changes in currency value






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






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






19. 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






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






21. 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






22. Changes in time






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






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






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






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






27. 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






28. 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






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






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






31. Recovery rate






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






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






34. Measures sensitivity to changes in currency value






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






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






37. Credit spread






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






39. 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






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






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






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






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






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






45. Recovery rate






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