CAIA Hedge Fund Questions (Module 7- 11) Questions and Answers Already Passed

CAIA Hedge Fund Questions (Module 7- 11) Questions and Answers Already Passed Module 7 - Structure, Categories & Biases ✔️✔️90% How are hedge fund databases populated and what is the implication of that process? A) Hedge fund managers required to report performance, which allows us to see complete information on hedge fund industry assets B) Hedge fund managers required to report performance, which leads to biases in return calculations C) Hedge fund mangers voluntarily report performance, which leads to biases in return calculations D) Hedge fund mangers voluntarily report performance, which allows us to see complete information on hedge fund industry assets ✔️✔️C) Hedge fund mangers voluntarily report performance, which leads to biases in return calculations How does the liquidity of hedge funds compare to that of mutual funds? A) Hedge funds and mutual funds have similar liquidity B) Hedge funds have greater liquidity than mutual funds C) Hedge funds have less liquidity than mutual funds ✔️✔️C) Hedge funds have less liquidity than mutual funds Which of the following most accurately portrays the structure of the hedge fund industry? A) Thousands of small funds manage the majority of the hedge fund industry's assets B) Few large funds with over $500mn in AUM manage the vast majority of hedge fund assets C) Small, medium, and large -sized funds manage similar portions of the total AUM of the industry D) Funds of funds manage the majority of the AUM in the hedge fund industry ✔️✔️B) Few large funds with over $500mn in AUM manage the vast majority of hedge fund assets Which biase arises due to the ability of hedge fund managers to decide whether or not to report their returns to a hedge fund database? A) Backfilled bias B) Selection bias C) Survivorship bias D) Smoothing bias ✔️✔️B) Selection bias Which biase arises when the historical returns of defunct hedge funds are deleted from the database? A) Backfilled bias B) Selection bias C) Survivorship bias D) Smoothing bias ✔️✔️C) Survivorship bias Which bias is due to how databases typically treat performance of hedge funds that start to report to the database? A) Backfilled bias B) Selection bias C) Survivorship bias D) Smoothing bias ✔️✔️A) Backfilled bias What is the implication of autocorrelation in hedge fund returns?