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






2. Underlying stock dividend yield






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






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






6. Definability - Commonality - Tradability






7. Credit spread






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






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






10. 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






11. Changes in time






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






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






14. Recovery rate






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






16. 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






17. Credit spread






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






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






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






21. Measures sensitivity to changes in currency value






22. Measures sensitivity to changes in currency value






23. Changes in time






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






25. 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






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






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






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






29. Recovery rate






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






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






32. Underlying stock dividend yield






33. 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






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






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






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






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






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






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






40. Definability - Commonality - Tradability






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






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






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






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






45. 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






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







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