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






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






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






4. Credit spread






5. Underlying stock dividend yield






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






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






8. Changes in time






9. Changes in time






10. Credit spread






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






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






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






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






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






16. Underlying stock dividend yield






17. 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






18. Recovery rate






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






20. Definability - Commonality - Tradability






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






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






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






24. Measures sensitivity to changes in currency value






25. Definability - Commonality - Tradability






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






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






28. 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






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






30. 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






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






32. 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






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. Recovery rate






35. Measures sensitivity to changes in currency value






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






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






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






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






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






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






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






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






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






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