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






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






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






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






5. Changes in time






6. Credit spread






7. Measures sensitivity to changes in currency value






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






9. Underlying stock dividend yield






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






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






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






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






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






15. 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






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






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






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






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






20. 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






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






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






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






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






25. Recovery rate






26. Definability - Commonality - Tradability






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






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






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. Underlying stock dividend yield






31. Recovery rate






32. Definability - Commonality - Tradability






33. Credit spread






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






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






36. 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






37. 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






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






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






40. Changes in time






41. Measures sensitivity to changes in currency value






42. 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






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






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






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






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