Chapter 9

Question 1

Periods of time during which investments can not be redeemed.

Answer 1

Lockups

Question 1

Simultaneous long and short matched stock exposure is an example of what type of hedge fund category?

Answer 1

Relative Value Strategy - Equity Market Neutral Strategy

Question 2

Changes in the direction of interest rates, equity, currency or commodity markets are what “order” risks?

Answer 2

First Order

Question 3

Liquidity, leverage, deal-break, default, couterparty, trading, concentration, pricing model, security specific and trading model are examples of what type of risk?

Answer 3

Second Order

Question 4

Having a “star manager” is an example of what “order” of risk?

Answer 4

Third Order

Question 5

___ usually involves the purchase of a track of raw land outside an urban area with expectation that the urban area will expand because of economic growth.

Answer 5

Land Banking

Question 6

____ is the redevelopment of abandoned or underused commercial or industrial property generally in an urban community

Answer 6

Brownfield development

Question 7

___ involve purchasing income-producing properties with the long-term objective of redeveloping properties and increasing income they generate

Answer 7

Redevelopment projects

Question 8

___ investors are presented with information about the general real estate or real estate securities that the pool management intends to invest in. However the exact specifications of investment are unknown and unavailable at the time the investor commits to this.

Answer 8

Blind Pool

Question 9

___ is widely regarded as a hedge against inflation. This is contrast to ___ which is historically shown to be negatively correlated with inflation.

Answer 9

Real Estate

Fixed Income

Question 10

___ are bonds that claim ownership to a portion of the cash flows from a group or pool of mortgages.

Answer 10

Mortgage Backed Securities (MBS)

Question 11

___ are also known as mortgage pass through securities.

Answer 11

Mortgage Backed Securities

Question 12

___ is the risk that the issuer might prepay or redeem some or all of the outstanding loan early.

Answer 12

Prepayment risk

Question 13

___ is a mortgage backed bond that separates mortgage pools into staggered maturity groups (tranches) that reallocate the interest and principal payments.

Answer 13

Collateralized mortgage obligations (CMO)

Question 14

___ divide the cash flows from the underlying mortgage securities into two or more new securities.

Answer 14

Stripped MBSs

Question 15

___ will tend to be more correlated to equities than bonds as their sensitivity to macroeconomic factors and overall economic health is similar to stocks.

Answer 15

REITs