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. 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






2. Measures sensitivity to changes in currency value






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






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






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






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






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






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






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






10. Definability - Commonality - Tradability






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






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






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






14. Changes in time






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






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






17. Underlying stock dividend yield






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






19. Underlying stock dividend yield






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






21. 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






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






23. Credit spread






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






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






26. 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






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






28. Credit spread






29. Recovery rate






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






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






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






33. 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






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






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






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






38. Measures sensitivity to changes in currency value






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






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






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






42. Recovery rate






43. Changes in time






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






45. Definability - Commonality - Tradability






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