[2008] Topic 81: Funds of Hedge Funds 相关习题 statements, describes, following, objective, structure

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AIM 1: Discuss the general structure and objective of a fund of hedge funds.

1、Which of the following statements best describes the fund-of-funds (FOF) class of hedge funds? A fund of funds:

A) is an open-end mutual fund that primarily invests in other open-end funds.

B) is open to institutional investors for the purpose of seeking arbitrage situations in hedge fund pricing.

C) allows smaller investors to access the hedge funds market.

D) allows smaller investors to participate in the venture capital market.

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The correct answer is C

Hedge funds classified as return enhancers have high returns and high correlations with traditional stock and bond portfolios.

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AIM 2: Explain how funds of hedge funds can be classified according to diversification characteristics.

1、A risk reducer hedge fund is characterized by:

A) high returns and high positive correlation with traditional asset classes. 

B) low returns and low positive correlation with traditional asset classes.

C) high returns and negative correlation with traditional asset classes. 

D) low returns and negative correlation with traditional asset classes.

gita

 

The correct answer is B

A risk reducer hedge fund is characterized by lower returns, and low correlations with traditional stock/bond asset classes. One example is a long/short equity fund.

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2、Fullen Capital Management recently started a convertible bond arbitrage hedge fund and is looking to market the fund to investors with traditional stock and bond portfolios. Based on the characteristics of similar funds, Fullen expects his hedge fund to have high returns and a relatively high correlation with a traditional stock and bond portfolio. In his marketing materials, Fullen would most accurately categorize the fund as a:

A) total diversifier.

B) risk reducer.

C) return enhancer. 

D) pure diversifier.