Concept Checkers

1. A specific class of assets the PWG mentions as a reason for attention to risk management in private pools is:

A. distressed debt.

B. large-cap equity.

C. futures contracts.

D. over-the-counter derivatives.

2. Which of the following is NOT a reason PWG recommends that only sophisticated investors invest in private pools?

A. To limit the demand and avoid bubbles.

B. Private pools can invest in illiquid investments.

C. Private pools may not fully disclose their strategies.

D. Private pools can use complex investment strategies.

3. Fiduciaries who invest in private pools of capital:

A. are breaking the law whether the private pool is foreign or domestic.

B. are considered sophisticated enough to be outside the PWG's guidelines.

C. have the same responsibilities as other investors in private pools of capital.

D. are breaking the law if the private pool operates in a foreign country, but not if it operates domestically.

4. According to the PWG, managers of private pools should:

A. have regulatory authorities create and maintain information as well as disseminate it.

B. be responsible for the creation and maintenance of information, but not its dissemination.

C. be responsible for the creation and maintenance of information as well as its dissemination.

D. have regulatory authorities create and maintain information, but the managers should disseminate it themselves.

5. Supervisors in the private pool market should:

A. avoid dealing with foreign authorities to avoid a conflict of interest.

B. require managers to reveal their trading strategies to them and to the public.

C. require managers to reveal their trading strategies to them, but not necessarily to the public.

D. communicate their expectations regarding prudent management of counterparty credit exposures.

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