Q1. Please complete the missing words in the following statement:

"The incentive fee resembles the payoff to a_______, which is ______ valuable when volatility is higher."

Select one:

A. put option; less

B. put option; more

C. call option; less

D. call option; more

Q2. Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical investment fund manager?

Please select ONE option

Select one:

A. Data mining in hedge fund databases can lead to unrealistic performance expectations

B. Survivorship bias in hedge fund databases can lead to unrealistic performance expectations

C. Data bias in hedge fund databases can lead to unrealistic performance expectations

D. Data analysis in hedge fund databases can lead to realistic performance expectations

Q3. Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical investment fund manager?

Please select ONE option:

Select one:

A. Tail events do not skew the distribution of hedge fund outcomes, making it difficult to obtain a representative sample of returns over relatively short periods of time.

B. Tail events do not skew the distribution of hedge fund outcomes, making it very easy to obtain a representative sample of returns over relatively short periods of time.

C. Tail events skew the distribution of hedge fund outcomes, making it difficult to obtain a representative sample of returns over relatively short periods of time.

D. Tail events skew the distribution of hedge fund outcomes, making it very easy to obtain a representative sample of returns over relatively short periods of time.