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






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






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. Recovery rate






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






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






8. Changes in time






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






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






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






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






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






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






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






16. Recovery rate






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






18. 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






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






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






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






22. Changes in time






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






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. Underlying stock dividend yield






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






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






28. Underlying stock dividend yield






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






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






31. Credit spread






32. Measures sensitivity to changes in currency value






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






34. 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






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






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






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






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






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






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






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






42. Measures sensitivity to changes in currency value






43. 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






44. Definability - Commonality - Tradability






45. Credit spread






46. 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






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