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






2. 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






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






4. Definability - Commonality - Tradability






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






6. 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






7. Changes in time






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






9. Definability - Commonality - Tradability






10. 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






11. Recovery rate






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






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






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






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






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






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






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






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






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






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






23. Credit spread






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






25. Measures sensitivity to changes in currency value






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






27. Recovery rate






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






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






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






31. Underlying stock dividend yield






32. Credit spread






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






34. Underlying stock dividend yield






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






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






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






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






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






41. 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






42. Changes in time






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






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






45. Measures sensitivity to changes in currency value






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