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Questions and Answers
What classification of alternative strategies emphasizes the use of market trends and directional bets?
What classification of alternative strategies emphasizes the use of market trends and directional bets?
Which strategy is least likely to be utilized in alternative mutual funds?
Which strategy is least likely to be utilized in alternative mutual funds?
What should be key components of the due diligence process when considering an alternative strategy fund?
What should be key components of the due diligence process when considering an alternative strategy fund?
Which risk-adjusted return measure is most relevant for assessing alternative investment performance?
Which risk-adjusted return measure is most relevant for assessing alternative investment performance?
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Which investor group is likely to find liquid alternative strategies most suitable?
Which investor group is likely to find liquid alternative strategies most suitable?
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What is the primary purpose of benchmarking alternative investment performance?
What is the primary purpose of benchmarking alternative investment performance?
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What is a common misconception about alternative investment strategies?
What is a common misconception about alternative investment strategies?
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What does a credit spread widening above 100 basis points indicate?
What does a credit spread widening above 100 basis points indicate?
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According to the yield to maturity comparison, which bank's bond shows a better yield if both bonds are issued for the same duration?
According to the yield to maturity comparison, which bank's bond shows a better yield if both bonds are issued for the same duration?
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What is the significance of monitoring a bond's yield to maturity?
What is the significance of monitoring a bond's yield to maturity?
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If James is waiting for a credit spread to widen to above 100 basis points before trading, what might be his primary motivation?
If James is waiting for a credit spread to widen to above 100 basis points before trading, what might be his primary motivation?
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Which level of basis points indicates a relatively low risk perception among investors?
Which level of basis points indicates a relatively low risk perception among investors?
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What is the primary goal of relative value strategies in alternative investments?
What is the primary goal of relative value strategies in alternative investments?
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Which of the following strategies typically has low exposure to underlying market direction?
Which of the following strategies typically has low exposure to underlying market direction?
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Which category of alternative investment strategies is characterized by higher expected return and risk?
Which category of alternative investment strategies is characterized by higher expected return and risk?
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In the context of alternative investments, which strategy would focus on corporate mergers and acquisitions?
In the context of alternative investments, which strategy would focus on corporate mergers and acquisitions?
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Which strategy involves taking advantage of price fluctuations of related assets without exposure to their direction?
Which strategy involves taking advantage of price fluctuations of related assets without exposure to their direction?
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What is the focus of event-driven strategies within alternative investments?
What is the focus of event-driven strategies within alternative investments?
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What is a characteristic of distressed security strategies?
What is a characteristic of distressed security strategies?
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Which strategy is generally associated with a focus on fixed income and interest rate differentials?
Which strategy is generally associated with a focus on fixed income and interest rate differentials?
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What defines a high-yield bond strategy in alternative investments?
What defines a high-yield bond strategy in alternative investments?
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What was the total market value of the Royal Bank of Canada position at reversal?
What was the total market value of the Royal Bank of Canada position at reversal?
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In the equity market-neutral trade, what was the profit or loss per share for the Toronto Dominion Bank?
In the equity market-neutral trade, what was the profit or loss per share for the Toronto Dominion Bank?
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What is a typical characteristic of a convertible arbitrage strategy?
What is a typical characteristic of a convertible arbitrage strategy?
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What was the annualized rate of return for the spread in the equity market-neutral trade?
What was the annualized rate of return for the spread in the equity market-neutral trade?
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What contributes to the steady return in a convertible arbitrage strategy?
What contributes to the steady return in a convertible arbitrage strategy?
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What was the profit or loss for the overall spread position in the equity market-neutral trade?
What was the profit or loss for the overall spread position in the equity market-neutral trade?
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What market condition does the convertible arbitrage strategy aim to be unaffected by?
What market condition does the convertible arbitrage strategy aim to be unaffected by?
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Which factor affects the theoretical value of a convertible security?
Which factor affects the theoretical value of a convertible security?
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What was the position taken for the Royal Bank of Canada in the equity market-neutral trade?
What was the position taken for the Royal Bank of Canada in the equity market-neutral trade?
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What happens when the trading price of a convertible bond deviates from its theoretical value?
What happens when the trading price of a convertible bond deviates from its theoretical value?
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What factor determines the investment value of a convertible bond when its issuer's stock price falls below the conversion price?
What factor determines the investment value of a convertible bond when its issuer's stock price falls below the conversion price?
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In which scenario does a convertible bond behave most like a regular bond?
In which scenario does a convertible bond behave most like a regular bond?
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What can a fund expect to achieve in a declining stock market with rising interest rates while holding a convertible bond and shorting the common stock?
What can a fund expect to achieve in a declining stock market with rising interest rates while holding a convertible bond and shorting the common stock?
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What is the main reason a fund long on convertible bonds might short the underlying common stock?
What is the main reason a fund long on convertible bonds might short the underlying common stock?
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What is generally true about the relationship between the amount of stock sold short and the conversion amount of a convertible bond?
What is generally true about the relationship between the amount of stock sold short and the conversion amount of a convertible bond?
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How might rising interest rates affect the value behavior of convertible bonds?
How might rising interest rates affect the value behavior of convertible bonds?
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What characteristic is significant when convertible bonds are considered in a rising stock market?
What characteristic is significant when convertible bonds are considered in a rising stock market?
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Clara, the investment manager, believes the bond is relatively cheap compared to the underlying stock. What investment strategy might she consider taking advantage of this belief?
Clara, the investment manager, believes the bond is relatively cheap compared to the underlying stock. What investment strategy might she consider taking advantage of this belief?
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What is likely to happen to convertible bond prices as the issuer's common stock rises significantly above the conversion price?
What is likely to happen to convertible bond prices as the issuer's common stock rises significantly above the conversion price?
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Study Notes
Alternative Investments: Strategies and Performance
- This chapter covers alternative investment strategies and performance measurement tools.
- It also explores comprehensive due diligence processes and the suitability of alternative strategies.
Learning Objectives
- Explain the various types of alternative strategies.
- Identify strategies most likely used in alternative mutual funds.
- Discuss risk and return measures for alternative strategies.
- Discuss benchmarking alternative investment performance.
- Describe the due diligence process for alternative strategy funds.
- Identify investor groups suitable for liquid alternatives.
Content Areas
- Alternative investment strategies
- Alternative strategy fund performance measurement
- Due diligence and suitability of alternative strategies
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Description
Test your knowledge on alternative investment strategies, including market trends, due diligence processes, and performance assessment. This quiz covers key concepts related to alternative mutual funds and their unique characteristics, making it a must for finance enthusiasts.
