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. Measures the convexity of the convertible-stock price relationship






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






3. Recovery rate






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






5. Measures sensitivity to changes in currency value






6. Definability - Commonality - Tradability






7. Changes in time






8. 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






9. 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






10. Definability - Commonality - Tradability






11. Changes in time






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






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






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






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






16. Underlying stock dividend yield






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






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






19. 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






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






21. 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






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






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






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






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






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






27. 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






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






29. 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






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






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






32. Credit spread






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






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






35. Underlying stock dividend yield






36. Measures sensitivity to changes in currency value






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






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






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






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






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






42. Credit spread






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






44. Recovery rate






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






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