CMSA (HEDGE FUND FUNDAMENTALS) EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ LATEST UPDATE

What are three characteristics of hedge funds? They are 1. Actively Managed 2. Unregulated 3. Limited Investors Why are Hedge Funds actively managed? 1. They aim for profitability regardless of market circumstances 2. Collect management and performance fees Why are Hedge Funds Unregulated? They can't market themselves generally only to accredited investors What limits are there for Hedge Funds finding investors? 1. Can only find accredited investors 2. Can only target a certain number of institutional investors Hedge Fund Managers usually have __ at risk their own capital What are the different types of Features in hedge funds? 1. They are defined by strategy (Long/Short Positions) 2. They are often largely leveraged 3. Require investors to lock up capital in the funds What are the differences between hedge funds and mutual funds? Hedge Funds 1. Minimal Regulation 2. Paid in a performance fee 3. Uses high leverage 4.Seeking high returns 5. Can be long or short 6. Low correlation with traditional markets Mutual Funds 1. Extensive regulation 2. Paid as a percentage of AUM 3. Low to no leverage 4. Objective is to outperform a benchmark 5. Usually holds long positions 6. There are high correlation with traditional markets Who is Alfred Jones? The man, the myth, the legend, the one who started the first hedge fund What are the different types of strategies for Hedge Funds? 1. Equity related 2. Fixed income related 3. Equity/Fixed income hybrid 4. Other (Global Macro) What are the different types of equity related hedge fund styles? 1. Equity long/short 2. Dedicated short 3. Equity Market Neutral