Alternative Investments: Strategies and performance

Question 1

designed to exploit inefficiencies and opportunities in the equity market by creating simultaneously long and short matched equity portfolios of approximately the same size

Answer 1

equity market-neutral strategy

Question 2

Invests in the equity or debt securities of companies that are in financial difficulty and face bankruptcy pr reorganization; these generally sell at deep discounts, reflecting the issuers’ weak credit quality

Answer 2

distressed security strategy

Question 3

A type of hedge fund that seeks to profit from unique events such as mergers, acquisitions, stock splits or buybacks

Answer 3

Event-driven strategies

Question 4

investing, generally using little or no leverage, in the junk bonds of a company the manager feels may get a credit upgrade or is a potantial takeover targer

Answer 4

high-yiled bond strategy

Question 5

investing simultaneously in long and short positions of the common stock of companies involved in a proposed merger or acquisition

Answer 5

Risk arbitrage strategy

Question 6

A strategy that profits from price and anomalies between related interest rate securities and their derivatives, including government and non-government bonds

Answer 6

fixed-income arbitrage strategy

Question 7

A fund where the net position must always be short. The fund may have long positions, but on a net basis, the fund must constantlt be short

Answer 7

short bias strategy

Question 8

A type of hedge fund that seeks to profit by exploiting irregularities or discrepancies in the pricing of related stocks, bonds or derivatives

Answer 8

Relative value strategies

Question 9

Invest in equity and debt securities of companies in emerging markets by using derivatives, short selling, and other complex investment strategies. As some emerging markets do not allow short selling and do not have viable derivative markets, these funds may not be to hedge. As a result, performance can be volatie

Answer 9

emerging markets alternative funds

Question 10

Invests in all major markets, including equities, bonds, currencies, and commodities with a strategy based on predictions from major events affecting entire economies

Answer 10

Global Macro strategy

Question 11

An alternative strategy that looks for mispricing between a convertible security and the underlying stock

Answer 11

Convertible arbitrage strategy