Concept Checkers

1. The Capital Decimation Partners hypothetical strategy is most similar to:

A. selling insurance.

B. buying insurance.

C. a perfect market-timing strategy.

D. a protective put option strategy.

2. Hedge funds that experience high positive serial correlation are most likely exposed to which of the following types of risk?

A. Currency risk.

B. Liquidity risk.

C. Market risk.

D. Factor risk.

3. " Which of the following are sources of return variances in a multifactor model?

I. Serial correlation.

II. Pairwise covariance between risk factors.

III. Risk factors.

IV. Residual variance.

The construction of linear clones for hedge funds using the rolling-window methodology as compared to the fixed-weight methodology reduces die impact preferred by active traders because it reduces:

A. estimation error.

B. illiquid assets.

C. rebalancing.

D. look-ahead bias.

Based on historical measures for the Sharpe ratio, which of the following hedge fund categories is characterized as having high relative performance?

A. Convertible Arbitrage.

B. Dedicated Short Bias.

C. Fixed Income Arbitrage.

D. Event Driven.

Lessons From The Intelligent Investor

Lessons From The Intelligent Investor

If you're like a lot of people watching the recession unfold, you have likely started to look at your finances under a microscope. Perhaps you have started saving the annual savings rate by people has started to recover a bit.

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