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






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






3. 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






4. Definability - Commonality - Tradability






5. 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






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






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






8. Definability - Commonality - Tradability






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






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






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






12. 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






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






14. Credit spread






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






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






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






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






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






20. Recovery rate






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






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






23. Credit spread






24. 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






25. Changes in time






26. 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






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






28. Measures sensitivity to changes in currency value






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






31. Measures sensitivity to changes in currency value






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






33. Underlying stock dividend yield






34. Changes in time






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






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






37. Underlying stock dividend yield






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






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






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






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






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






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






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






45. Recovery rate






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