To view full questions and answers, please kindly visit our site: http://cfaexampreparation.com/1039/17-cfa-level-1-mock-exam-questions-and-answers-on-alternative-investments/
The upward bias of returns if data only for currently existing (surviving) firms is included.
Buying debt of mature companies that are experiencing financial
difficulties(potentially or currently in default, or in bankruptcy
proceedings)
A hard hurdle rate means that incentive fees are earned only on
returns in excess of the benchmark. A soft hurdle rate means that
incentive fees are paid on all profits, but only if the hurdle rate is
met.
The appraisal index, repeat sales index, and REIT indices.
Leveraged buyouts
Measures risk as downside deviation rather than standard deviation
1. The formative stage: Breaks down into the angel stage (investments
made on ideas/business plans), the seed stage (investments made for
product development, marketing, and market research), and the early
stage (refers to investments made to fund initial commercial production
and sales).2. Later stage: Typically used for expansion of production or
increasing sales through expanded marketing campaigns. 3.
Mezzanine-stage: capital provided to prepare the firm for their IPO.
1. Market/comparable approach2. Discounted cash flow approach3. Asset-based approach
The inventive fee is not paid on gains that just offset prior losses.
Thus, inventive fees are only paid to the extent that the current value
of an investor's account is above the highest value perviously recorded.
This feature ensures that investors will not be charged incentive fees
twice on the same gains in their portfolio values.
1. Roll yield: yield due to a difference b/w the spot price and
futures price, or a difference b.w two futures prices with different
expiration dates. Positive for a market in backwardation and negative
for a market in contango. 2. Collateral yield: the interest earned on
collateral required to enter into a futures contract3. Change in spot
prices
The fund purchases the company with debt. This debt can be bank debt,
high-yield bonds, or mezzanine financing (debt or preferred shares that
are subordinate to the high-yield bonds issued and carry warrant or
conversion features that give investors participation in equity value
increases).
No comments:
Post a Comment