Alternative Investments - Alternative Investments Section 1

Avatto>>CFA Level 1>>PRACTICE QUESTIONS>>Alternative Investments>>Alternative Investments Section 1

1. Alternative investment funds are most likely managed:

  • Option : C
  • Explanation : Most alternative investment funds are actively managed and seek to generate positive alpha returns.
Cancel reply
Cancel reply

2. Compared with traditional investments, alternative investments are more likely to be characterized by higher:

  • Option : C
  • Explanation : Alternative investments are typically less transparent and less liquid compared to traditional investments.
Cancel reply
Cancel reply

3. Relative to traditional investments, alternative investments are less likely to be characterized by:

  • Option : B
  • Explanation : Relative to traditional investments, alternative investments are characterized by low correlation with traditional investments, low level of regulation, and unique legal and tax considerations.
Cancel reply
Cancel reply

4. Which of the following factors is most likely to be a characteristic of alternative investments?

  • Option : A
  • Explanation : General characteristics of alternative investments include: illiquidity of underlying investments, narrow manager specialization, low correlation with traditional investments, low level of regulation and less transparency, limited and potentially problematic historical risk and return data, unique legal and tax considerations.
Cancel reply
Cancel reply

5. Alternative investments are least likely to be characterized by higher:

  • Option : C
  • Explanation : Alternative investments are often characterized by higher fees and illiquidity.
Cancel reply
Cancel reply