1.As one of your duties as the chief risk officer for a fund of funds, you *uate the risk management of candidate hedge funds in your *uation of a newly organized two person hedge fund, which ofthe following is your primary consideration?
　　A. Ask reporting structure
　　B. Investment style
　　c. Assets under management
　　D. Last month's return
　　2.If all spot interest rates are increased by one basis point, a value of a portfolio of swaps will increase by $ 1100. How many Eurodollar futures contracts are needed to hedge the portfolio?
　　A. 44
　　B. 22
　　C. 11
　　D. 1100
　　3.Every year Business Week reports the performance ofa group of existing equity mutual funds, selected for their popularity. Taking the average performance of this group of funds will create
　　A. Survivorship bias only
　　B. Selection bias only
　　C. Both survivorship and selection bias
　　D. Instant-history bias only
　　Answer:
　　1.B
　　Of the four choices, your primary consideration is the investment style of the two person hedge fund in your *uation of the risk management of candidate hedge funds. The investment style will help you ascertain the type of assets in which the fund invests and the types of risks that the fund undertakes.
　　2.A
　　Eurodollar futures contracts are constructed so that the PV 0.01 is always equal to $25 per contract.
　　Therefore, we need $1100/$25= 44 contracts.
　　3.C
　　The publication lists existing funds, so it must be subject to suvivorship bias, because dead funds are not considered. In addition, there is selection bias because the publication focuses on just the popular funds, which are large and likely to have done welL Answers a) and b) are incomplete. Answer d) is also incomplete.