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. 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






2. Underlying stock dividend yield






3. Measures sensitivity to changes in currency value






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






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






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






7. 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






8. Definability - Commonality - Tradability






9. Measures sensitivity to changes in currency value






10. Recovery rate






11. Changes in time






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






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






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






15. 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






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






17. Underlying stock dividend yield






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






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






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






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






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






23. Credit spread






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






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






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






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






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






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






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






32. Definability - Commonality - Tradability






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






34. 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






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






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






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






38. Changes in time






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






40. Credit spread






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






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






43. Recovery rate






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






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






46. 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