Chapter 22

Question 1

This states that an asset cannot be sold to realize a capital loss and then purchased again within 30 days of the sale.

Answer 1

superficial loss rule

Question 2

It is a contract provision preventing a hedge fund manager from collecting a performance fee until the highest previous net asset value is exceeded.

Answer 2

high-water mark

Question 3

It is the minimum return a fund must make before a performance fee can be taken.

Answer 3

hurdle rate

Question 4

It is roughly defined as the total value of securities bought and sold in relation to the overall net assets of the portfolio.

Answer 4

portfolio turnover

Question 5

This legal document states the objectives, risks, and terms of investment involved with a private placement

Answer 5

Offering memorandum

Question 6

It is a debt instrument issued by a bank in the form of a deposit note. the interest rate is tied to the performance of an underlying asset, such as a portfolio of stocks, an index, or one or more mutual funds or ETFs.

Answer 6

principal-protected note

Question 7

It is a service that combines several managed investment products into a single account controlled by a single authority.

Answer 7

overlay management

Question 8

It is a pool of capital gathered and invested in a portfolio of individual securities according to a specific investment mandate.

Answer 8

managed product

Question 9

These are designed to achieve a specific client goal, such as principal protection, tax management, or inflation indexation

Answer 9

outcome-based investments

Question 10

This type of wrap fund invesets in portfolios of other managed products, usually mutual funds.

Answer 10

fund of funds

Question 11

These are portfolios of managed products wrapped together and sold as a single product

Answer 11

wrap fund

Question 12

These are accounts for which a qualified portfolio manager is authorized to select securities and execute trades on behalf of a client.

Answer 12

Wrap account

Question 13

The classification of mutual funds in Canada is carried out by this committee which comprises Canada’s major mutual fund database and research firms

Answer 13

Canadian Investment Funds Standards Committee (CIFSC)

Question 14

This type of wrap fund target investors with higher levels of investable assets. Accounts are managed on a segregated basis, thereby enabling the client to own individual securities.

Answer 14

separately managed wraps

Question 15

These ETFs are constructed with derivatives such as swaps to achieve the return effect of the index.

Answer 15

Synthetic ETFs

Question 16

This type of commodity ETFs invest in the commodity directly.

Answer 16

Physical-based ETFs

Question 17

This type of commodity ETFs invest in futures contracts of different commodities, with an underlying portfolio of money market instruments to cover the full value of the contracts.

Answer 17

Future-based ETFs

Question 18

This type of commodity ETFs invest in listed companies that are involved in exploration and development or in the processing or refining of a commodity.

Answer 18

Equity-based ETFs

Question 19

The normal, upward-slope condition of Commodity ETFs is known as

and the premium of a deferred month over a prior month is known as the

Answer 19

Contango

Roll Yield

Question 20

Exchange-traded funds that employ swaps are exposed to _____________ risk since you are swapping with another party directly.

Answer 20

counterparty risk

Question 21

inverse and leveraged ETFs are suitable investment vehicles for the individual investor in only two specific applications:

Answer 21

hedging a current portfolio exposure and day trading.

Question 22

Hedge Fund Service Providers

Supplies services to the hedge fund in the implementation of trading strategies.

Answer 22

Prime Broker

Question 23

Hedge Fund Service Providers

Processes subscriptions and redemptions and calculates the hedge fund’s NAV.

Answer 23

Fund Administrator

Question 24

Hedge Fund Service Providers

Responsible for holding and tracking all of the assets.

Answer 24

Custodian

Question 25

Do leverage, inverse, and regular ETFs have resets?

Answer 25

Leveraged ETFs have resets
Inverse ETFs may or may not have resets
Regular ETFs do not reset

Question 26

Refers to a portfolio construction strategy that uses broad-based ETFs as a passive core holding. The satellite assets are intended to boost returns above the core asset returns.
Essentially you hold two ETFs. One core broad-based ETF like VOO, and one satellite ETF such as a smaller ETF representing a particular sector, syle funds, or country ETFs that have a bit of risk to increase returns.

Answer 26

Core and Satellite

Question 27

HEDGEFUNDS

are services, such as analyst reports, that the fund receives in exchange for business rendered to its supplier.

Answer 27

Soft-dollar arrangements

Question 28

The open source code that powers Bitcoin?

Answer 28

Blockchain

Question 29

Members of the peer-to-peer bitcoin platform independently confirm the transactions using high-speed computers through a process called

Answer 29

bitcoin mining

Question 30

Hedge funds targeted toward high-net-worth and institutional investors are usually structured as

Answer 30

limited partnerships or trusts, and are issued by way of private placement.

Question 31

is a piece of code that represents ownership of a digital concept (a bitcoin) with financial value

Answer 31

Bitcoin as a token

Question 32

is the distributed network, or blockchain, that maintains the ledger of balances of bitcoin the token.

Answer 32

Bitcoin the protocol