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. Measures sensitivity to changes in currency value






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






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






5. Changes in time






6. Credit spread






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






8. Credit spread






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






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






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






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






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






14. Definability - Commonality - Tradability






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






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






17. Definability - Commonality - Tradability






18. Changes in time






19. 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






20. Recovery rate






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






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






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






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






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






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. Measures the convexity of the convertible-stock price relationship






29. Underlying stock dividend yield






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






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






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






33. Measures sensitivity to changes in currency value






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






35. Underlying stock dividend yield






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






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






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






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






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






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






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






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






46. 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