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






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






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






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






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






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






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






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






10. Measures sensitivity to changes in currency value






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






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






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






14. Underlying stock dividend yield






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. Recovery rate






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






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






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






21. Credit spread






22. Credit spread






23. Changes in time






24. 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






25. Definability - Commonality - Tradability






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






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






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






29. Changes in time






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






31. Measures sensitivity to changes in currency value






32. Recovery rate






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






34. Definability - Commonality - Tradability






35. 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






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






37. 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






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






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






40. Underlying stock dividend yield






41. 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






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






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






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






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






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