Questions and Answers of Bond Markets Analysis And Strategies

Define a hedge fund and indicate the size of the hedge fund market.
Discuss the main agency problems faced by hedge fund investors.
Explain the meaning of the adaptive market hypothesis framework.
Define hedge fund activism and explain its role in today’s corporate governance.
Describe the various risk factors applicable to the investments made by hedge funds.
Explain the impact of hedge funds on both the financial industry and society.
Discuss how fund flows and asset sizes affect fund survival.
Explain why market and strategy timing skills are important for fund survival.
Discuss how using dynamic strategies and moving among markets over a fund’s lifetime affect survival.
Discuss tail risks in the context of fund liquidation.
Explain possible reasons for hedge fund termination.
Identify the key differences between hedge fund managers and other investment managers.
Explain the role education plays in hedge fund performance.
Discuss why social capital is crucial for hedge fund managers.
Explain the importance of risk management skills to hedge fund managers.
Discuss whether a hedge fund manager’s professional and educational background is critical to success.
Discuss how hedge fund regulation differs across countries.
Explain the consequences associated with international differences in hedge fund regulation.
Identify where hedge funds normally register within the United States and explain why the location of hedge fund registration matters.
Identify different types of hedge fund service providers.
Identify some agency problems in hedge fund management.
Discuss how hedge fund governance differs from corporate governance.
Identify three categories of hedge fund governance devices.
Identify five categories of hedge fund agency concerns.
Explain what constitutes an independent director or board member.
Identify indices used for measuring governance and indicate their usefulness for measuring hedge fund governance.
Define an activist hedge fund.
Identify the typical strategy used by a long- focused AHF.
Discuss the range of actions an AHF might take to execute its strategy.
Explain how activist funds’ risk and return compare with other market indices.
Discuss the impact that activist funds have on companies they target for intervention.
Explain the pros and cons of AHFs to society.
Discuss the extent to which the statement that U.S. hedge funds do not pay taxes and even that they have no tax obligations is accurate.
Assuming an onshore hedge fund is set up as a U.S. limited partnership, identify the three possible categories of investors in such a hedge fund and discuss their situation regarding U.S. federal
Explain what is the “2 and 20” compensation structure in a hedge fund, and how the investment manager and the fund GPs are taxed on this compensation.
Explain the extent to which the structure of an offshore fund domiciled in the Cayman Islands differs from that of an onshore fund.
Describe the 2 and 20 fee structure in terms of the hedge fund industry.
Explain several provisions involving hedge funds.
Discuss the motivation for hedge fund managers to take on high risk when the fund is greatly “underwater.”
Explain a lockup period in the context of hedge fund compensation.
Describe funds of hedge funds.
Explain the difference between onshore and offshore hedge funds.
Explain the three legal forms under which offshore hedge funds may be registered.
Identify the most popular locations to establish an offshore hedge fund and indicate the institutional characteristics prevailing in such places.
Identify the most important regulatory changes for hedge funds resulting from the financial crisis of 2007– 2008.
Identify the nine types of long/ short equity positions.
Identify the six types of equity market- neutral strategies.
Explain the importance of beta- adjusted net exposure.
Describe two yield enhancement strategies used as an option overlay in equity portfolios.
Explain different portfolio diversification of a long/ short equity fund compared to an equity market- neutral fund.
List the core substrategies commonly regrouped under event driven.
Identify the types of instruments and positions that event- driven managers most commonly trade.
Discuss the preferred background for someone seeking a position in an event- driven fund.
Discuss whether event- driven funds are expected to be correlated with each other.
Define the global macro hedge fund strategy and discuss its appeal for investors.
Discuss the use of investment themes in a global macro fund’s decision- makingprocess.
Explain the differences between systematic and discretionary managedfutures.
Discuss why systematic managed futures funds have acquired a greater share of hedge fund asset allocations in recent decades.
Explain how global macro hedge funds can trade volatility to earn returns for their investors.
Describe the basic steps of convertible bond arbitrage.
Describe two types of debt arbitrage.
Discuss basis risk in relative value strategies and whether the strategies are true arbitrage.
Explain why using leverage is necessary when employing relative value strategies.
Discuss the basic steps in an equity market- neutral strategy.
Explain the main differences between single multistrategy and multistrategy FOFs’ structures.
Discuss the main advantages and drawbacks of each structure.
Explain how multistrategy FOFs diversify risks.
Explain how a multistrategy fund compares to global indices in terms of a quantitative profile.
Discuss the various kinds of multistrategy FOFs available.
Describe the characteristics of hedge fund returns.
Describe the due diligence process for hedge funds.
Describe VaR, ES, and TR and their benefits over simply using volatility as a measure of risk.
Discuss the benefits and limitations of linear factor models.
Explain the relation between hedge fund characteristics and risks.
Discuss how hedge funds and the potential for “shadow banking” may contribute to systemic risk and the prospect for “contagion.”
Identify the most promising areas of research for future researchers in the area of hedge fund systemic risk.
Discuss the impact of hedge fund regulation on hedge funds’ ability to deliver positive alpha to hedge fund investors.
Describe how the risk of using outdated antivirus software can be reflected in the hedge fund’s risk management process.
Discuss the main methods used to identify operational risks in financial institutions such as hedge funds.
Explain how an organization can be assured that operational risks in outsourced processes are addressed and managed properly and according to an organization’s standards.
Identify the key elements to include in an overview reporting dashboard on operational risk.
List several documents that would be useful to collect from a hedge fund during the due diligence process.
Identify the steps used to evaluate the board of directors of a hedge fund’s offshore vehicles.
Identify the hedge fund service providers that most commonly run the risk of being susceptible to performing inadequate due diligence.
List several key questions investors should ask fund administrators during the due diligence process.
Discuss why some perceive hedge funds as controversial.
Discuss methods governments can use to regulate hedge funds.
Discuss methods used by the U.S. government to regulate hedge funds.
Discuss the long- term implications of heightened hedge fund regulation.
Discuss possible ways to curtail the effects of heightened hedge fund regulation.
Identify the main issues in hedge fund research.
Explain survivorship bias and how it affects hedge fund research.
Describe risk measurement bias and its importance for hedge fund research.
Discuss the stale price bias and how researchers adjust for this bias.
Explain self- selection bias and its importance.
Discuss the evidence on skill versus luck in delegated fund management.
Explain the major challenges in hedge fund activism research.
Prove that from the definition of correlation being “covariance rescaled.”Using the following output to answer each of the question: B, PM PM
Calculate the leverage factor L used by the manager.Using the following output to answer each of the question: Hedge Fund Rp = 26% percent = 20% percent Pp=-0.4 Market RM = 15% percent = 15%
Calculate Jensen’s alpha.Using the following output to answer each of the question: Hedge Fund Rp = 26% percent = 20% percent Pp=-0.4 Market RM = 15% percent = 15% percent Risk Free Rate RF = 1%

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