76 Free CFA Mock Exam Questions and Answers on Alternative Investments

With the expectation of providing an online learning method for CFA exams, 76 Free CFA Mock Exam Questions and Answers on Alternative Investments are highly recommended to help you conquer the extensive CFA curriculum. Based on the multiple choice exam format, this up-to-date free CFA mock exam facilitates you to deeply and quickly understand the concepts. This is an essential tool of CFA self-studying to improve your skills and polish up your critical thinking. Practice with our tests also help you ingrain the important things under the exam pressure and keep track of your learning process at any time. Don’t miss any of the following questions and hope you get higher grades!
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they have low sharpe ratios and also have underperformed returns on global stocks and bonds (highly volatile)

• what are the benefits of investing in commodities?
• what is the equation for pricing a commodities future?
• what is an individual managed account in commodities?
• what are some of the risks of investing in commodities?

when a company issues debt to fund a dividend distribution to its current shareholders (not an exit but often a step towards an exit)

• what is later stage funding (in the context of VC)?
• what does early stage refer to (in the context of VC)?
• what is the recapitalization (in the context of PE)?
• what is the cost approach to value real estate?

this is the funding a company receives when they are preparing for their IPO

• what is the recapitalization (in the context of PE)?
• what does early stage refer to (in the context of VC)?
• what is mezzanine stage financing? (in the context of VC?)
• what is later stage funding (in the context of VC)?

Their performance is no correlated with the market, and therefore they are seen as a good hedge, also they have outperformed the traditional market in the past perhaps because of their illiquidity of these markets (skilled managers can find these mispricings)

• What are the potential benefits of Alternative Investments in portfolio management?
• what are some of the risks of investing in commodities?
• what is the IPO method of selling out of a portfolio investment (in the context of PE)?
• what are the formative stages of a company? (in context of VC investments)

Absolute performance refers to the nominal performance of the fund (10%) and relative performance refers to performance over a benchmark (5% over a specific benchmark)

• what is an appraisal index in measuring real estate performance?
• what is the difference between a management fee and an incentive fee for a hedge fund?
• what is the difference between absolute basis and relative basis in terms of stating performance of a hedge fund?
• what is a repeat sales index in measuring real estate performance?

they are investing in the securities of a firm that are issuing or repurchasing securities, spinning off a part of their business, selling assets, or distributing capital

• describe a convertible arbitrage fixed income strategy of a hedge fund.
• describe a special situations strategy of a hedge fund.
• describe an event driven strategy of a hedge fund.
• describe merger arbitrage.

when loans or mortgages of commercial properties are pooled together and sold

• what is a short bias strategy?
• what is a CMBS (commercial mortgage backed securities)?
• what is an individual managed account in commodities?
• what is a managed future fund?

large sums of money, minimal liquidity needs, investment sophistication

• what does market neutral mean?
• what is a managed future fund?
• What do you need to invest in a hedge fund?
• what is angel investing?

the prices usually move in the direction of inflation, good way to hedge out inflation risk

• What do you need to invest in a hedge fund?
• what are the benefits of investing in commodities?
• what are some of the risks of investing in commodities?
• what are portfolio companies?

using the liquidation or fair market value of assets to value a company, also make sure to subtract liabilities so you are only valuing the equity portion of the company

• what is the notice period when talking about hedge funds?
• what is the market/comparables approach to valuing a company in PE?
• what is the comparable sales approach to value real estate?
• what is the asset-based approach to valuing a portfolio company in PE?