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Test your basic knowledge |
Hedge Funds
Start Test
Study First
Subjects
:
business-skills
,
industries
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
Gamma
Vega
non-investible FoHF
advantage of FoHF
2. Diversification - econ of scale - info adv - liquidity - manager access - lower negotiated fees - lower reg hurdle - currency hedging - pro management
Primary Ways FoHF add value
5 reasons to hedge liquid risk factors
disadvantage of FoHF
advantage of FoHF
3. Recovery rate
desirable properties of FoHF investible indices
disadvantage of FoHF
upsilon
Omicron
4. Use technical for both idea generation and execution of strategy.
HF due deligence
Systematic Global Macro
Beta Overlay Econ Risk Factor
upsilon
5. Measures sensitivity to changes in currency value
FoHF Due diligence
Chi
advantage of FoHF
Theta
6. Definability - Commonality - Tradability
Omicron
Beta Overlay Econ Risk Factor
FoHF Due diligence
phi
7. Changes in time
Beta Overlay Requirement
HF due deligence
phi
Theta
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
desirable properties of FoHF investible indices
Rho
Gamma
Beta Overlay Requirement
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
5 reasons to hedge liquid risk factors
Beta Overlay Requirement
Chi
Beta Overlay Econ Risk Factor
10. Definability - Commonality - Tradability
Beta Overlay Econ Risk Factor
5 reasons to hedge liquid risk factors
Rho
Discretionary Global Macro
11. Changes in time
non-investible FoHF
Chi
Theta
disadvantage of FoHF
12. Double fee - performance fee - taxes - limited tranparency - lack of control
FoHF Due diligence
upsilon
Primary Ways FoHF add value
disadvantage of FoHF
13. Transparent - verifiable - accountable - investible - reasonable - representative
Theta
Beta Overlay Requirement
desirable properties of FoHF investible indices
Rho
14. Idea generation - optimal idea expression - sizing the position - execution - managing risk
desirable properties of FoHF investible indices
FoHF Due diligence
Long/Short Strategy
phi
15. Measures the convexity of the convertible-stock price relationship
Gamma
Systematic Global Macro
phi
Chi
16. Underlying stock dividend yield
Primary Ways FoHF add value
Omicron
phi
Primary Ways FoHF add value
17. Use technical for both idea generation and execution of strategy.
investible FoHF
Omicron
phi
Systematic Global Macro
18. Use fundamental first then technical. Technical isn't used for idea generation but for execution of strategy.
Discretionary Global Macro
Omicron
HF due deligence
advantage of FoHF
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
5 reasons to hedge liquid risk factors
disadvantage of FoHF
Beta Overlay Econ Risk Factor
Global Macro Models
20. Transparent - verifiable - accountable - investible - reasonable - representative
Chi
desirable properties of FoHF investible indices
Omicron
advantage of FoHF
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
Rho
Gamma
Discretionary Global Macro
Primary Ways FoHF add value
22. Background - product info - performance - asset allocation - manager selection - portfolio construction - risk management - admin/op - client reporting - compliance/legal
Primary Ways FoHF add value
FoHF Due diligence
non-investible FoHF
Chi
23. Double fee - performance fee - taxes - limited tranparency - lack of control
disadvantage of FoHF
Theta
Rho
phi
24. Background - product info - performance - asset allocation - manager selection - portfolio construction - risk management - admin/op - client reporting - compliance/legal
FoHF Due diligence
Theta
Chi
desirable properties of FoHF investible indices
25. Carry Trade - Yeild Curve relative value trades - Purchasing Power Parity - Valuation models - option pricing models
5 reasons to hedge liquid risk factors
Rho
upsilon
Global Macro Models
26. Always positive - highest for at the money - measures convertible's price sensitivity relative to changes in stock volatility
Beta Overlay Requirement
Long/Short Strategy
Vega
Rho
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
Chi
Beta Overlay Requirement
Beta Overlay Econ Risk Factor
Discretionary Global Macro
28. Carry Trade - Yeild Curve relative value trades - Purchasing Power Parity - Valuation models - option pricing models
HF due deligence
Beta Overlay Econ Risk Factor
non-investible FoHF
Global Macro 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
Primary Ways FoHF add value
Global Macro Models
non-investible FoHF
Gamma
30. No transparency - - non-investible - lack of liquidity - difficult to replicate - report time lag
Long/Short Strategy
non-investible FoHF
phi
Chi
31. Measures the convertible's price sensitivity relative to changes in interest rates
5 reasons to hedge liquid risk factors
Rho
advantage of FoHF
advantage of FoHF
32. Credit spread
Omicron
phi
disadvantage of FoHF
advantage of FoHF
33. Access bias: imposing strict selection criteria on track records - transparency - valuation - AUM
desirable properties of FoHF investible indices
investible FoHF
Beta Overlay Requirement
Rho
34. Specific nature of security - use of leverage - valuation method - manager skill
non-investible FoHF
HF due deligence
Long/Short Strategy
Gamma
35. Underlying stock dividend yield
phi
Gamma
Beta Overlay Requirement
Omicron
36. Measures sensitivity to changes in currency value
Global Macro Models
5 reasons to hedge liquid risk factors
Chi
Global Macro Models
37. Specific nature of security - use of leverage - valuation method - manager skill
Beta Overlay Econ Risk Factor
desirable properties of FoHF investible indices
HF due deligence
phi
38. Access bias: imposing strict selection criteria on track records - transparency - valuation - AUM
desirable properties of FoHF investible indices
disadvantage of FoHF
investible FoHF
Beta Overlay Requirement
39. Diversification - econ of scale - info adv - liquidity - manager access - lower negotiated fees - lower reg hurdle - currency hedging - pro management
FoHF Due diligence
advantage of FoHF
non-investible FoHF
Beta Overlay Requirement
40. Always positive - highest for at the money - measures convertible's price sensitivity relative to changes in stock volatility
desirable properties of FoHF investible indices
Gamma
Vega
advantage of FoHF
41. Idea generation - optimal idea expression - sizing the position - execution - managing risk
5 reasons to hedge liquid risk factors
advantage of FoHF
Long/Short Strategy
Gamma
42. Credit spread
phi
Chi
Discretionary Global Macro
Omicron
43. No transparency - - non-investible - lack of liquidity - difficult to replicate - report time lag
advantage of FoHF
upsilon
phi
non-investible FoHF
44. Recovery rate
Beta Overlay Requirement
upsilon
advantage of FoHF
HF due deligence
45. Measures the convertible's price sensitivity relative to changes in interest rates
Chi
Long/Short Strategy
upsilon
Rho
46. Use fundamental first then technical. Technical isn't used for idea generation but for execution of strategy.
Omicron
advantage of FoHF
Beta Overlay Requirement
Discretionary Global Macro