42 CFA Level 1 Online Mock Test Free Questions on Alternative Investments

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incentive fee is not paid on gains that just offsets prior losses

• Roll yield
• high water mark
• collateral yield
• relative value

1) cost approach2) comparables approach3) income approach: NPV of discounted future CF?

• 73e) valuation of real estate
• What are 3 drawbacks to fund of funds?
• 73n) how to value closely held companies?
• 73l) HF performance

= (Net operating Income) / (Market Cap Rate)market cap rate = (benchmark NOI) / (Benchmark transaction price)

• How do you calculate the income approach for real estate?
• 73e) valuation of real estate
• What are some applications to use ETFs?
• 73n) how to value closely held companies?

spot price (1+rf) + storage costs - convenience yieldconvenience yield = value of having the physical commodity for use over the period of the futures contract

• Future price (on commodity)
• mezzanine financing
• Event driven strategies
• sortino ratio

higher sharpe ratios, lower STdev, low correlation between HF and conventional investments -- but beware of biases in this data

• high water mark
• mezzanine financing
• relative value
• 73l) HF performance

contango = future prices higher than spot prices, little or no conv. yieldbackwardation = futures prices less than spot prices, high conv. yield

• collateral yield
• real estate valuation
• mezzanine financing
• contango and backwardation

yield due to a difference between the spot price and futures price or a difference between two futures prices with different expiration dates

• Roll yield
• macro strategies
• sortino ratio
• collateral yield

financing includes seed stage and early stage

• Describe the seed stage of venture capital investing?
• Describe the early stage of venture capital investing?
• Describe the later stage of venture capital investing?
• Describe the formative stage of venture capital investing?

market neutralfundamental growthfundamental valuequantitative directionalshort bias

• sortino ratio
• macro strategies
• Event driven strategies
• equity hedge fund strategies

absolute performance. no advert, qualified investors, , but exempt from most SEC regs. performance fee.Long/Short funds: worldwide, long/short equities, use leverage.Market-neutral: hedges against market moves, use derivs, long/short positions offset each other.Global macro: make bets on direction of market, currency, interest rate. high leverage and derivativesevent-driven: try to capitalize on unique opportunities in market (distressed company or potential merger situation)

• 73i) define hedge fund in terms of objectives, legal structure, fee structure. describe various classifications of HF
• 73q) motivation for invest in commodities, comm derivs, and comm-linked securities
• 73m) how legal environment effects valuation of closely held companies
• describe hedge funds, private equity, real estate, commodities, and other alternative investments, including, as applicable, strategies, sub-categories, potential benefits and risks, fee structures, and due diligence

capital provided for companies moving into operation and before commercial manufacturing and sales have occurred

• Describe the seed stage of venture capital investing?
• Describe the formative stage of venture capital investing?
• Describe the early stage of venture capital investing?
• Describe the later stage of venture capital investing?

1. immovable, unique assets2. properties are only approximately compared to other properties3. properties are generally illiquid4. 'market value' of a given property is difficult to asses5. high transaction costs and management fees6. suffers inefficiencies because information is not freely available

• What are the investment characteristics of venture capital investing?
• What are some benefits of fund of funds hedge funds?
• What are the four stages of venture capital investing?
• What are some characterstics of real estate as an investable asset class?