29 CFA Level 1 Practice Questions Free with Instant Answers on Alternative Investments

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earn absolute returns. Earn a risk-free return.

• Active Risk
• Real Assets
• Arbitrage
• Benchmark

Hedge funds are distinguished by lower regulation, specialized trading strategies, and performance based compensation. Hedge funds and mutual funds both invest in the same types of traditional assets.

• Hedge vs Mutual Funds?
• Relative return standard
• Real Assets
• Hedge Funds

evaluate investment, against a benchmark, outperforming benchmark. Evaluates the returns of a portfolio relative to a benchmark.

• Hedge vs Mutual Funds?
• Absolute Return Standard
• Active Return
• Relative return standard

return computation, statistical, valuation and portfolio management

• Securities Structures
• 4 Methodologies AI Analysis
• Commodities
• Hedge Funds

government regulation & taxation

• Real Assets
• Regulatory Structures
• Securities Structures
• Trading Structures

Active management, absolute and relative return generation, arbitrage, return enhancement & return diversification

• Alternative Investments
• Goals in Alternative Assets
• What is Mezzanine Debt?
• Traditional Investments

delivered to market. Metals, agricultural products, energy, building materials.

• Commodities
• Lumpy assets
• Illiquidity
• Inefficiency

Development, execution of trading strategies

• Securities Structures
• Active Return
• Trading Structures
• Regulatory Structures

Tranched securities w/ varying levels of risk and seniority. Backed by an underlying portfolio.

• What is a collateralized debt obligations?
• What is Mezzanine Debt?
• What is a credit derivative?
• Goals in Alternative Assets

Buying and holding, meet risk and return objectives

• Active Management
• Active Risk
• Passive Investing
• Active Return

1. Debt, equity securities like venture capital (finance startup companies),2. leveraged buyouts LBOs (public company to private), 3.mezzanine debt (blend of private debt and equity financing)4. distressed debt (companies near bankruptcy). Not publicly traded.

• Active Risk
• Active Return
• Private Equity
• Illiquidity

derivatives with contingent payoffs tied to the credit risk of underlying assets.

• What is Mezzanine Debt?
• Trading Structures
• Arbitrage
• What is a credit derivative?

private investment vehicles. Minimal regulatory restrictions. Uses derivatives, leverage, short positions and other strategies.

• Efficiency
• Hedge Funds
• Active Risk
• Real Assets