66 CFA Level 2 Practice Exam 2015 Questions and Answers on Alternative Investments

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(or roll yield) The component of the return on a commodity futures contract that comes from rolling long futures positions forward through time. (St - Ft,T) / St

• Roll return
• Collateral return
• ratchet
• Rebalancing return

A legal obligation by the back that it will make corresponding investment in the future market and then continuously roll those futures.

• Models of Expected Returns
• Commodity Index Certificate Based on a Commodity Index
• Three inputs of LBO model
• Total return of a commodity

REIT is the general partner and holds a controlling interest in a partnership that owns and operates the properties

• DOWNREIT
• REOCs
• contango
• UPREIT

Applied to FIRST YEAR NOI= discount rate - growth ratecap rate = NOI1/value OR NOI1/comparable sales price

• distribution waterfall
• capital assets
• appraisal based index
• capitalization rate (cap rate)

Don't generate income nor can they be consumed. E.g. FX, artwork

• removal for cause
• Types of REITs
• store of value assets
• Ways to value REITs

a) IPOb) Secondary Market Salec) Management Buyoutd) Liquidation

• Ways to value REITs
• Types of Exit Routes
• exit value
• Types of REITs

This clause allows a GP to be fired if supermajority (usually >75%) of the LPs agree to do so.

• exit value
• no fault divorce
• shares VC
• Roll return

a. business conditions - economic factors (GDP), employment, income, interest rates, inflationb. new property lead time - market conditions can change significantly while approvals are obtained, while property is completed - market conditions could changec. cost and availability of capital d. unexpected inflatione. demographic factorsf. lack of liquidityg. environmental issuesh. availability of informationi. management expertisej. leverage - measured by loan-to-value (LTV) ratiok. other factors - unobserved

• Principal Risks of real estate investment
• assessed value of real estate
• Reasons to invest in real estate
• transaction based index