Asset Classes - Collective Investment Schemes

Question 1

The net asset value of an investment trust is:

Answer 1

The value of the underlying investments per share

Question 2

Which one of the following is NOT a service of prime brokerage in relation to hedge funds?

Answer 2

Formulating investment strategies

The managers of a hedge fund or alternative asset management vehicle are primarily concerned with formulating and executing investment strategies. The administration of the fund's account is usually left to the prime broker, which has the expertise and organisational systems to offer more specialised and supportive services, such as: 
Securities lending and borrowing 
Leveraged trade execution 
Cash management 
Core settlement 
Custody

Question 3

With regard to an open-ended investment company, where would you acquire shares?

Answer 3

Authorised corporate director

Question 4

From which of the following organisations would an investor normally buy shares in an exchange-traded fund?

Answer 4

Broker

Question 5

hedge fund

Answer 5

Hedge funds may be open- or closed-ended. Generally they are closed-ended arrangements.

Question 6

Prime brokerage relates to the provision of services by investment banks to whom?

Answer 6

Hedge fund clients

Question 7

Which of the following are TRUE of hedge funds?

Answer 7

They are generally based offshore

There are no set rules on how hedge funds are priced, but most are based overseas.

Question 8

When assets have been rehypothecated, to whom do they then belong?

Answer 8

Prime broker

Question 9

Who can an investor buy units in a unit trust from?

Answer 9

Manager

Question 10

Which one of the following is most likely to levy performance-related fees on the investor?

Answer 10

Hedge funds

Question 11

How are shares in an open-ended investment company MOST LIKELY to be priced?

Answer 11

Single-pricing based on the value of the underlying shares

Question 12

definition of prime brokerage

Answer 12

A collection of services provided by investment banks to their hedge fund clients

Question 13

a hedge fund

Answer 13

is an unregulated fund. These cannot therefore be freely marketed to private customers.

Question 14

Which ONE of the following is an exchange-traded, open-ended fund?

Answer 14

ETF

Question 15

An open-ended investment means that:

Answer 15

The trust or company can expand if demand is high

Question 16

An authorised corporate director is:

Answer 16

Responsible for the management of an OEIC (ICVC)

Question 17

Investment trusts are normally:

Answer 17

Limited companies

Question 18

Which one of the following is not a service covered under prime brokerage?

Answer 18

Share buy-back advice

Question 19

Why might a hedge fund wish to use a prime broker?

Answer 19

A more tailored and bespoke range of services is offered to them

Question 20

What does the financial term rehypothecation refer to?

Answer 20

A prime broker might pledge hypothecated client-owned securities as collateral for a brokerage’s bank loan

Question 21

Why would you participate in a long/short equity hedge fund strategy?

Answer 21

To profit regrdless of market movement

Question 22

Synthetic finance uses which of the following?

Answer 22

Derivatives

Question 23

An investor is looking to buy into an unregulated collective investment scheme (UCIS) and speaks to their adviser, which of the following observations would be correct if made by the adviser?

Answer 23

Neither capital nor returns are guaranteed within the fund

Question 24

Which of the following products can be traded real-time, giving an investor the ability to track an index at low cost?

Answer 24

ETF