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






2. Definability - Commonality - Tradability






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






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






5. 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






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






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






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






9. 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






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






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






12. Measures sensitivity to changes in currency value






13. 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






14. 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






15. 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






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






17. Recovery rate






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






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






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






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






22. Definability - Commonality - Tradability






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






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






25. Underlying stock dividend yield






26. Underlying stock dividend yield






27. Recovery rate






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






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






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






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






32. Changes in time






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






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






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






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






39. Credit spread






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






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






42. 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






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






44. Changes in time






45. Credit spread






46. Measures sensitivity to changes in currency value







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