Alternative Investment
Alternative Investment
Alternative Investment
B) appraisal index.
B) smoothing.
A) 17.6%.
B) 16.5%.
C) 14.1%.
A) mezzanine financing.
B) angel investing.
C) early-stage financing.
A) 7.9%.
B) 13.6%.
C) 8.1%.
B) short positions in both the acquirer and the firm being acquired.
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Question #7 of 41 Question ID: 416047
The difference between a hedge fund's trading net asset value and its accounting net asset value is that:
B) hedge funds.
B) $8,800,000.
C) $800,000.
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Question #15 of 41 Question ID: 416052
The component of the return on a futures position that results from interest earned on U.S. Treasury bills deposited to establish
the position is called the:
A) collateral yield.
B) current yield.
C) roll yield.
Which of the following will result from futures prices for a particular commodity being in contango?
An equity hedge fund strategy that focuses primarily on exploiting overvalued securities is best described as a(n):
For an investment with negatively skewed returns, the most appropriate of the following risk measures is:
A) value at risk.
B) Sortino ratio.
C) shortfall risk.
B) higher fees.
C) lower leverage.
Springfield Fund of Funds invests in two hedge funds, DXS and REF funds. Springfield initially invested $50.0 million in DXS and
$100.0 million in REF. After one year, DXS and REF were valued at $55.5 million and $104.5 million, respectively, net of both
hedge fund management fees and incentive fees. Springfield Fund of Funds charges 1.0% management fee based on assets
under management at the beginning of the year and a 10.0% incentive fee independent of management fees. The annual net
return for Springfield Fund of Funds is closest to:
A) 5.0%.
B) 6.0%.
C) 5.5%.
B) real estate.
C) currencies.
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Question #22 of 41 Question ID: 416042
A private equity provision that requires managers to return any periodic incentive fees resulting in investors receiving less than
80% of profits is a:
A) drawdown.
C) clawback.
A hedge fund started with an initial investment of 75 million. The end-of-year value after fees for Year 1 was 70 million. For Year
2, the end-of-year value before fees is 90 million. The fund has a 2 and 20 fee structure. Management fees are paid
independently of incentive fees and are calculated on end-of-year values. Incentive fees are calculated using a high water mark
and a soft hurdle rate of 2%. Total fees paid for Year 2 are:
A) €4.8 million.
B) €4.4 million.
C) €5.8 million.
Real estate and private equity most likely share which of the following characteristics?
A Canadian hedge fund has a value of C$100 million at the beginning of the year. The fund charges a 2% management fee
based on assets under management at the beginning of the year and a 20% incentive fee with a 10% hard hurdle rate. Incentive
fees are calculated net of management fees. The value at the end of the year before fees is C$112 million. The net return to
investors is closest to:
A) 9%.
B) 10%.
C) 8%.
Question #26 of 41 Question ID: 460709
Victrix is a hedge fund that has a 3-and-15 fee structure. Compared to hedge funds with 2-and-20 fee structures, Victrix charges
higher:
A) load fees.
B) incentive fees.
C) management fees.
B) foreign currencies.
C) lock-up periods.
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Question #28 of 41 Question ID: 416049
The yield from an investment in commodities that results from a difference between the spot price and a futures price is the:
A) convenience yield.
B) collateral yield.
C) roll yield.
Under which approach to valuing real estate properties is an analyst most likely to estimate a capitalization rate?
B) Income approach.
C) Cost approach.
In the valuation of a real estate investment trust (REIT), subtracting the REIT's liabilities from the value of its real estate assets
and dividing by the number of shares outstanding provides an estimate of the REIT's:
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A) convertible arbitrage.
B) market neutral.
C) merger arbitrage.
The period of time within which a hedge fund must fulfill a redemption request is the:
A) lockup period.
B) withdrawal period.
C) notice period.
An additional risk of direct investment in real estate, which is not typically a significant risk in a portfolio of traditional investments,
is:
A) counterparty risk.
B) liquidity risk.
C) market risk.
If a commodity's convenience yield is close to zero, the futures market for that commodity is most likely:
A) in backwardation.
B) in contango.
C) at fair value.
A hedge fund strategy that takes positions in shares of firms undergoing restructuring or acquisition is an:
B) macro strategy.
The formative stage of venture capital investing when capital is furnished for market research and product development is best
characterized as the:
A) seed stage.
C) early stage.
A) liquid.
B) transparent.
C) leveraged.
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Question #41 of 41 Question ID: 416061
For which of the following investments is an investor most likely to require the greatest liquidity premium?
B) Commodity futures.
Explanation
Private equity funds tend to have lockup periods; investors will require liquidity premiums as compensation. REITs and
commodity futures are exchange-traded instruments and much more liquid than private equity funds.
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