Question 1

Hedge funds differ from mutual funds in terms of

Accepted Answer

A) transparency. 
B) investors. 
C) investment strategy. 
D) liquidity. 
E) All of the options are correct. 
A) transparency. 
B) investors. 
C) investment strategy. 
D) liquidity. 
E) All of the options are correct.

Question 2

The typical hedge fund fee structure is

Accepted Answer

A) a management fee of 1% to 2%. 
B) an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance. 
C) a 12-b1 fee of 1%. 
D) a management fee of 1% to 2% and an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance. 
A) a management fee of 1% to 2%. 
B) an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance. 
C) a 12-b1 fee of 1%. 
D) a management fee of 1% to 2% and an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance.

Question 3

Assume newly-issued 30-year on-the-run bonds sell at higher yields (lower prices) than 29½-year bonds with a nearly identical duration.A hedge fund that sells 29½-year bonds and buys 30-year bonds is taking a

Accepted Answer

A) market neutral position. 
B) conservative position. 
C) bullish position. 
D) bearish position. 
A) market neutral position. 
B) conservative position. 
C) bullish position. 
D) bearish position.

Question 4

If the yield on mortgage-backed securities was abnormally high compared to Treasury bonds, a hedge fund pursuing a relative value strategy would

Accepted Answer

A) short sell the Treasury bonds and short sell the mortgage-backed securities. 
B) short sell the Treasury bonds and buy the mortgage-backed securities. 
C) buy the Treasury bonds and buy the mortgage-backed securities. 
D) buy the Treasury bonds and short sell the mortgage-backed securities. 
A) short sell the Treasury bonds and short sell the mortgage-backed securities. 
B) short sell the Treasury bonds and buy the mortgage-backed securities. 
C) buy the Treasury bonds and buy the mortgage-backed securities. 
D) buy the Treasury bonds and short sell the mortgage-backed securities.

Question 5

Shares in hedge funds are priced

Accepted Answer

A) at NAV. 
B) a significant premium to NAV. 
C) a significant discount from NAV. 
D) a significant premium to NAV or a significant discount from NAV. 
A) at NAV. 
B) a significant premium to NAV. 
C) a significant discount from NAV. 
D) a significant premium to NAV or a significant discount from NAV.

Question 6

A hedge fund pursuing a ______ strategy is betting one sector of the economy will outperform other sectors.

Accepted Answer

A) directional 
B) nondirectional 
C) stock or bond 
D) arbitrage or speculation 
A) directional 
B) nondirectional 
C) stock or bond 
D) arbitrage or speculation

Hedge funds differ from mutual funds in terms of

The typical hedge fund fee structure is

Assume newly-issued 30-year on-the-run bonds sell at higher yields (lower prices) than 29½-year bonds with a nearly identical duration.A hedge fund that sells 29½-year bonds and buys 30-year bonds is taking a

If the yield on mortgage-backed securities was abnormally high compared to Treasury bonds, a hedge fund pursuing a relative value strategy would

Shares in hedge funds are priced

A hedge fund pursuing a ______ strategy is betting one sector of the economy will outperform other sectors.

The Investment Environment

Financial Markets, Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioural Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

Exam 26: Hedge Funds

Hedge funds differ from mutual funds in terms of

The typical hedge fund fee structure is

Assume newly-issued 30-year on-the-run bonds sell at higher yields (lower prices) than 29½-year bonds with a nearly identical duration.A hedge fund that sells 29½-year bonds and buys 30-year bonds is taking a

If the yield on mortgage-backed securities was abnormally high compared to Treasury bonds, a hedge fund pursuing a relative value strategy would

Shares in hedge funds are priced

A hedge fund pursuing a ______ strategy is betting one sector of the economy will outperform other sectors.

The Investment Environment

Financial Markets, Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioural Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters