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






2. Credit spread






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






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






5. Credit spread






6. Underlying stock dividend yield






7. Measures sensitivity to changes in currency value






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






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






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






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






12. 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






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






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






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






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






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






18. 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






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






20. 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






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






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






23. Measures sensitivity to changes in currency value






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






25. 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






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






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






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






29. Recovery rate






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






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






32. 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






33. Definability - Commonality - Tradability






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






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






36. Recovery rate






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






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






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






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






41. 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






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






43. Changes in time






44. Changes in time






45. Underlying stock dividend yield






46. Definability - Commonality - Tradability