June 2010
Intermediate to advanced
208 pages
5h 28m
English
Glossary
Following is a list of top hedge fund and alternative investment terms and keywords that are important to understand if you are going to work in the hedge fund industry.
alpha
Alpha goes a step further than excess return and adds risk to the equation. Alpha is the portfolio's risk-adjusted performance or the “value added” provided by a manager. Mathematically, alpha is the incremental difference between a manager's actual results and his expected results, given the level of risk. A positive alpha indicates that a portfolio has produced returns above the expected level—at the same level of risk—and a negative alpha suggests the portfolio underperformed given the level of risk assumed.
back office
The back office staff deal with trade processing, reconciliation, and cash management. They also perform administrative functions that support the trading of securities, including record keeping, trade confirmation, trade settlement, and regulatory compliance. If used in sales, the back office fulfills customers’ orders and may usually perform the duties involved in customer support call centers.
beta
Beta is a measure of sensitivity to the market benchmark, or how volatile a security or portfolio is relative to the whole market. A diversified portfolio with a beta of 1.0 would indicate that the portfolio would respond in tandem with the market. A beta greater than 1.0 indicates that a portfolio would be more responsive to market movements, while a beta below 1.0 would indicate ...
