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. Measures the convexity of the convertible-stock price relationship






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






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






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






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






6. Credit spread






7. Credit spread






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






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






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






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






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






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






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






15. 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






16. Measures sensitivity to changes in currency value






17. Changes in time






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






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. Underlying stock dividend yield






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






23. 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






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






25. Definability - Commonality - Tradability






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






27. Recovery rate






28. Definability - Commonality - Tradability






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






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






31. 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






32. 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






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






34. Measures sensitivity to changes in currency value






35. Recovery rate






36. Changes in time






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






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






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






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






43. 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






44. Underlying stock dividend yield






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






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