Hedge Funds

Which of the following is not important for the expected trading costs of a trade:

• Trade size

• Asset class

• Market conditions

• The zodiac sign (Sternzeichen) of the trader

True or False: Large funds tend to make larger investments to invest a sizeable share of the assets under management.

• True

• False

True or False: Large trades are more likely to move prices and make trades less profitable.

• True

• False

True or False: In contrast to mutual funds, hedge funds are not allowed to use leverage.

• True

• False

What does AUM stand for in the context of hedge funds?

• Assets under Management

• Adobe Update Manager

• Adaptive User Model

• Animal Unit Month

What is a hedge fund?

• It is a pool of investors' money with low risk investment

• a private investment fund run by partners

• It is the same as a pension fund

What kind of investors invest in hedge funds?

• only banks

• only very wealthy private investors

• banks, insurance companies, high-net worth individuals

choose the correct statement

• mutual funds as well as hedge funds can only invest in stocks and bonds

• mutual funds contrary to hedge funds cannot invest in securities that are not registered with the Securities Exchange Commission

• mutual funds and hedge funds can invest in currencies, derivatives, land and real estate.

leverage is a way to

• invest by using credit lines and hope the returns on investment are bigger than the interest.

• invest by selecting safe securities such as bonds and shares

• be less exposed to investment risk

a long/ short equity strategy is when

• buys underprices stocks while selling overpriced shares

• buys overprices shares while selling underpriced stocks