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






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






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






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






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






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






8. Recovery rate






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






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






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






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






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






14. 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






15. Definability - Commonality - Tradability






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






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






18. 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






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






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






22. Definability - Commonality - Tradability






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






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






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






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






27. Credit spread






28. 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






29. 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






30. Changes in time






31. Underlying stock dividend yield






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






33. Recovery rate






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






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






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






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






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






39. Underlying stock dividend yield






40. Changes in time






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






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






43. Measures sensitivity to changes in currency value






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






45. Measures sensitivity to changes in currency value






46. Credit spread