LeaPrep · CFA Level I · Mock Test 1

Alternative
Investments.

Topic 8

15 câu hỏi · 3 slide / câu · ~23 phút

Mock: 1
Subject: Alternative Investments
Câu hỏi: 15
Format: 3 lựa chọn A/B/C

Nội dung: câu hỏi · hướng dẫn tư duy · đáp án & giải thích

MOCK

Alternative Investments

Buổi học hôm nay

Alternative
Investments.

Alternative Investments · Mock 1 01 / 15

Câu 1 / 15

When evaluating alternative investment funds in comparison to traditional funds, an investor can expect that alternative investment funds will:

(A)have higher management fees.
(B)require lower capital commitments.
(C)provide more detail on returns earned.

Alternative Investments · Mock 1 01 / 15

Hướng dẫn tư duy · Câu 1

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01Relative to funds which incorporate more traditional asset classes
02alternative investment funds will often have higher management fees
03require higher capital commitments

Alternative Investments · Mock 1 01 / 15

Đáp án · Câu 1

Đáp án đúng

have higher management fees.

Giải thích

Relative to funds which incorporate more traditional asset classes, alternative investment funds will often have higher management fees, require higher capital commitments, and provide less detail on not only the returns earned but also on the positions held by the fund.

Alternative Investments · Mock 1 02 / 15

Câu 2 / 15

A private equity fund organized in Year 1, began accepting capital commitments in Year 2, and made its first investment in Year 3. The vintage year for the fund is:

(A)Year 1.
(B)Year 2.
(C)Year 3.

Alternative Investments · Mock 1 02 / 15

Hướng dẫn tư duy · Câu 2

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01The vintage year of a private equity fund is the year the fund makes its first investment.

Alternative Investments · Mock 1 02 / 15

Đáp án · Câu 2

Đáp án đúng

Year 3.

Giải thích

The vintage year of a private equity fund is the year the fund makes its first investment.

Alternative Investments · Mock 1 03 / 15

Câu 3 / 15

Hedge fund strategies such as convertible arbitrage fixed income and high yield fixed income are most accurately described as:

(A)event-driven.
(B)opportunistic.
(C)relative value.

Alternative Investments · Mock 1 03 / 15

Hướng dẫn tư duy · Câu 3

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01Relative value strategies involve buying a security and short selling a related security.
02The fixed income strategies mentioned are classified as relative value strategies.
03Event-driven strategies are designed to focus on acquisitions or restructuring events that create the potential for profit in the debt or equity of a corporation.

Alternative Investments · Mock 1 03 / 15

Đáp án · Câu 3

Đáp án đúng

relative value.

Giải thích

Relative value strategies involve buying a security and short selling a related security. The fixed income strategies mentioned are classified as relative value strategies. Event-driven strategies are designed to focus on acquisitions or restructuring events that create the potential for profit in the debt or equity of a corporation. Opportunistic strategies typically focus on commodity trading and macro-level events.

Alternative Investments · Mock 1 04 / 15

Câu 4 / 15

Applications of distributed ledger technology in finance most likely include:

(A)tokenization of ownership documents.
(B)order execution by algorithmic trading.
(C)automated platforms for investment advice.

Alternative Investments · Mock 1 04 / 15

Hướng dẫn tư duy · Câu 4

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01Tokenization is a possible application of distributed ledger technology.
02Algorithmic trading and robo-advisors do not require a distributed ledger.

Alternative Investments · Mock 1 04 / 15

Đáp án · Câu 4

Đáp án đúng

tokenization of ownership documents.

Giải thích

Tokenization is a possible application of distributed ledger technology. Algorithmic trading and robo-advisors do not require a distributed ledger.

Alternative Investments · Mock 1 05 / 15

Câu 5 / 15

For an investment structured as a partnership, what can be specified in a partnership agreement that allows limited partners to recover incentive fees when returns on fund investments exited early are better than investments on subsequent returns?

(A)Catch-up clause.
(B)Clawback provision.
(C)Deal-by-deal waterfall.

Alternative Investments · Mock 1 05 / 15

Hướng dẫn tư duy · Câu 5

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01A clawback provision allows limited partners to "claw-back" incentive fees paid on profitable deals if low or negative returns on subsequent investments result in overall returns below the target rate.

Alternative Investments · Mock 1 05 / 15

Đáp án · Câu 5

Đáp án đúng

Clawback provision.

Giải thích

A clawback provision allows limited partners to "claw-back" incentive fees paid on profitable deals if low or negative returns on subsequent investments result in overall returns below the target rate.

Alternative Investments · Mock 1 06 / 15

Câu 6 / 15

Alternative investments are least likely to:

(A)provide less liquidity compared to traditional investments.
(B)have returns negatively correlated with traditional investments.
(C)require larger capital outlays compared to traditional investments.

Alternative Investments · Mock 1 06 / 15

Hướng dẫn tư duy · Câu 6

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01While returns on alternative investments may have less than perfect correlation with returns on traditional investments, they are unlikely to be negatively corrlated.
02Alternative investments tend to be less liquid and to require larger minimum investments compared to traditional investments.

Alternative Investments · Mock 1 06 / 15

Đáp án · Câu 6

Đáp án đúng

have returns negatively correlated with traditional investments.

Giải thích

While returns on alternative investments may have less than perfect correlation with returns on traditional investments, they are unlikely to be negatively corrlated. Alternative investments tend to be less liquid and to require larger minimum investments compared to traditional investments.

Alternative Investments · Mock 1 07 / 15

Câu 7 / 15

A closed-end REIT with a finite life has undertaken the strategy of investing in distressed properties and pursuing large-scale redevelopments. This real estate strategy is best described as:

(A)Core-plus.
(B)Value-add.
(C)Opportunistic.

Alternative Investments · Mock 1 07 / 15

Hướng dẫn tư duy · Câu 7

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01Opportunistic real estate strategies involve pursuing large-scale redevelopment, repurposing assets, investing in distressed properties, and potentially speculating on market upturns.
02Core-plus involves undertaking modest development and redevelopment.
03Value-add operates on a larger scale than core-plus, but not quite as large as opportunistic.

Alternative Investments · Mock 1 07 / 15

Đáp án · Câu 7

Đáp án đúng

Opportunistic.

Giải thích

Opportunistic real estate strategies involve pursuing large-scale redevelopment, repurposing assets, investing in distressed properties, and potentially speculating on market upturns. Core-plus involves undertaking modest development and redevelopment. Value-add operates on a larger scale than core-plus, but not quite as large as opportunistic.

Alternative Investments · Mock 1 08 / 15

Câu 8 / 15

A disadvantage of using the multiple of invested capital as a performance measure for private capital investments is that it does not consider:

(A)the timing of cash flows.
(B)the value of any remaining assets.
(C)the fund’s performance in earlier periods.

Alternative Investments · Mock 1 08 / 15

Hướng dẫn tư duy · Câu 8

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01The multiple of invested capital is the ratio, over the life of the fund, of total capital returned and the value of remaining assets to total capital paid in.
02A disadvantage of this measure is that it does not consider the timing of cash inflows and outflows.

Alternative Investments · Mock 1 08 / 15

Đáp án · Câu 8

Đáp án đúng

the timing of cash flows.

Giải thích

The multiple of invested capital is the ratio, over the life of the fund, of total capital returned and the value of remaining assets to total capital paid in. A disadvantage of this measure is that it does not consider the timing of cash inflows and outflows.

Alternative Investments · Mock 1 09 / 15

Câu 9 / 15

For an investment in a private capital partnership, management fees are most likely calculated as a percentage of the:

(A)total amount of investor funds committed to the partnership at its inception.
(B)amount of investor funds that have actually been invested in portfolio companies
(C)total (market or model) value of the portfolio companies held in the portfolio at year- end.

Alternative Investments · Mock 1 09 / 15

Hướng dẫn tư duy · Câu 9

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01For private capital partnerships
02management fees are based on the total amount of committed capital
03even prior to its investment in portfolio companies.

Alternative Investments · Mock 1 09 / 15

Đáp án · Câu 9

Đáp án đúng

total amount of investor funds committed to the partnership at its inception.

Giải thích

For private capital partnerships, management fees are based on the total amount of committed capital, even prior to its investment in portfolio companies.

Alternative Investments · Mock 1 10 / 15

Câu 10 / 15

The category of alternative investments most likely to produce current income as well as the potential for appreciation in value is:

(A)timberland.
(B)commodities.
(C)infrastructure.

Alternative Investments · Mock 1 10 / 15

Hướng dẫn tư duy · Câu 10

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01Timberland can earn income from the harvest and sale of trees and can also increase in value over time.
02Investments in commodities may provide price appreciation but typically do not produce income.
03While brownfield (constructed) infrastructure investments may produce current income, greenfield (to be constructed) infrastructure investments do not provide income until they are built and put into service.

Alternative Investments · Mock 1 10 / 15

Đáp án · Câu 10

Đáp án đúng

timberland.

Giải thích

Timberland can earn income from the harvest and sale of trees and can also increase in value over time. Investments in commodities may provide price appreciation but typically do not produce income. While brownfield (constructed) infrastructure investments may produce current income, greenfield (to be constructed) infrastructure investments do not provide income until they are built and put into service.

Alternative Investments · Mock 1 11 / 15

Câu 11 / 15

Which of the following is a disadvantage of direct investments in real estate?

(A)The initial outflow needed for the investment tends to be relatively high.
(B)Noncash depreciation and interest expense are not typically tax deductible to the investor.
(C)Returns tend to be highly correlated with stock and bond investments.

Alternative Investments · Mock 1 11 / 15

Hướng dẫn tư duy · Câu 11

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01A direct investment in real estate often requires a high amount of initial capital to participate.
02Noncash depreciation and interest expense are typically tax deductible, and direct real estate investments can reduce the risk of a portfolio due to low correlations of returns with traditional investment vehicles.

Alternative Investments · Mock 1 11 / 15

Đáp án · Câu 11

Đáp án đúng

The initial outflow needed for the investment tends to be relatively high.

Giải thích

A direct investment in real estate often requires a high amount of initial capital to participate. Noncash depreciation and interest expense are typically tax deductible, and direct real estate investments can reduce the risk of a portfolio due to low correlations of returns with traditional investment vehicles.

Alternative Investments · Mock 1 12 / 15

Câu 12 / 15

Bill Guillen invests $10 million in a fund-of-funds that allocates 30% to hedge fund X, 30% to hedge fund Y, and 40% to hedge fund Z. The fund-of funds has a fee structure of 1 and 10, with the management fee calculated on the amount of the initial investment and incentive fees calculated independently of management fees. Returns after fees for the three hedge funds over the year are as follows: fund X = 14%, fund Y = –8%, and fund Z = 22%. Guillen's return on his investment in the fund-of-funds is closest to:

(A)8.5%.
(B)9.6%.
(C)10.6%.

Alternative Investments · Mock 1 12 / 15

Hướng dẫn tư duy · Câu 12

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01The returns on the investment before any fund-of-funds fees are as follows: 0.3(14%) + 0.3(–8%) + 0.4(22%) = 10.6% Management fee = 1% Incentive fee = 0.10(10.6%) = 1.06% After-fee return on fund-of-funds investment = 10.6% – 1% – 1.06% = 8.54%

Alternative Investments · Mock 1 12 / 15

Đáp án · Câu 12

Đáp án đúng

8.5%.

Giải thích

The returns on the investment before any fund-of-funds fees are as follows:

0.3(14%) + 0.3(–8%) + 0.4(22%) = 10.6%

Management fee = 1%

Incentive fee = 0.10(10.6%) = 1.06%

After-fee return on fund-of-funds investment = 10.6% – 1% – 1.06% = 8.54%

Alternative Investments · Mock 1 13 / 15

Câu 13 / 15

Which of the following statements is most accurate regarding the stages of venture capital investment?

(A)Angel investors are more likely to be individuals than venture capital funds.
(B)Mezzanine-stage financing refers to debt with the option to convert to equity.
(C)Later stage financing typically occurs as the company is preparing for its IPO.

Alternative Investments · Mock 1 13 / 15

Hướng dẫn tư duy · Câu 13

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01The angel stage is the first block of funding in the formative stage, usually before a venture capital fund has become involved.
02Later stage financing is used for expansion, before mezzanine-stage financing, which is so called because it is raised to prepare the firm for IPO, not because it is convertible debt.

Alternative Investments · Mock 1 13 / 15

Đáp án · Câu 13

Đáp án đúng

Angel investors are more likely to be individuals than venture capital funds.

Giải thích

The angel stage is the first block of funding in the formative stage, usually before a venture capital fund has become involved. Later stage financing is used for expansion, before mezzanine-stage financing, which is so called because it is raised to prepare the firm for IPO, not because it is convertible debt.

Alternative Investments · Mock 1 14 / 15

Câu 14 / 15

The waterfall structure that is most advantageous to the limited partners in a private equity fund is:

(A)a European waterfall structure.
(B)a deal-by-deal waterfall structure.
(C)an American waterfall structure with a clawback provision.

Alternative Investments · Mock 1 14 / 15

Hướng dẫn tư duy · Câu 14

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01In a European waterfall (whole-of-fund) structure, limited partners receive all of their initial investment plus a return equal to the hurdle rate before the general partner collects any incentive fees.
02With an American (deal-by-deal) waterfall structure, the general partner may keep a portion of gains on profitable investments before the limited partners' initial investment plus the hurdle rate is returned.
03A clawback provision allows limited partners with a deal-by-deal waterfall structure to get the same overall gains as with a European waterfall structure, but the cash flows to the limited partners may come later in the fund's life.

Alternative Investments · Mock 1 14 / 15

Đáp án · Câu 14

Đáp án đúng

a European waterfall structure.

Giải thích

In a European waterfall (whole-of-fund) structure, limited partners receive all of their initial investment plus a return equal to the hurdle rate before the general partner collects any incentive fees. With an American (deal-by-deal) waterfall structure, the general partner may keep a portion of gains on profitable investments before the limited partners' initial investment plus the hurdle rate is returned. A clawback provision allows limited partners with a deal-by-deal waterfall structure to get the same overall gains as with a European waterfall structure, but the cash flows to the limited partners may come later in the fund's life.

Alternative Investments · Mock 1 15 / 15

Câu 15 / 15

The Triangle-Base hedge fund reported the following numbers at the end of its third year of trading:

Opening fund value (after prior year fees):	$320.0 million
Ending fund value (before fees):	$345.0 million
Management fee (2%):	$6.4 million
Incentive fee (20%):	$0.0 million

The most likely reason no incentive fee was paid for the year is that:

(A)the fund has a hard hurdle rate of 5% and the incentive fee is calculated net of management fees.
(B)the fund has a soft hurdle rate of 8% and the incentive fee is calculated independent of management fees.
(C)the incentive fee is calculated using a high-water mark and the fund value has already increased by more than 20% in years 1 and 2 of trading.

Alternative Investments · Mock 1 15 / 15

Hướng dẫn tư duy · Câu 15

Đọc đề và định hướng phân tích.

Các bước suy luận then chốt trước khi chọn đáp án.

01Return before management fee = (345 / 320) − 1 = 7.8%.
02The return independent of fees does not meet an 8% hurdle rate.
03Return net of management fee = [(345 − 6.4) / 320] − 1 = 5.8%.

Alternative Investments · Mock 1 15 / 15

Đáp án · Câu 15

Đáp án đúng

the fund has a soft hurdle rate of 8% and the incentive fee is calculated independent of management fees.

Giải thích

Return before management fee = (345 / 320) − 1 = 7.8%.

The return independent of fees does not meet an 8% hurdle rate.

Return net of management fee = [(345 − 6.4) / 320] − 1 = 5.8%.

The return net of fees is greater than the 5% hard hurdle rate, so incentive fees would be paid on the 0.8% return (above 5%).

A high-water mark would not affect the incentive fee if the fund had increased in value in every year of trading.

LeaPrep · CFA Level I

Done.
15 câu.

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AlternativeInvestments.

AlternativeInvestments.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Đọc đề và định hướng phân tích.

Done.15 câu.

Alternative
Investments.

Alternative
Investments.

Done.
15 câu.