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






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






3. Credit spread






4. Definability - Commonality - Tradability






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






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






7. Recovery rate






8. Measures sensitivity to changes in currency value






9. Definability - Commonality - Tradability






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






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






12. Measures sensitivity to changes in currency value






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






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






15. Underlying stock dividend yield






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






17. Changes in time






18. Credit spread






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






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






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






23. 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






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






25. Underlying stock dividend yield






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






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






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






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






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






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






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






34. Changes in time






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






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






37. Recovery rate






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






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






40. 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






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






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






44. 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






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






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