Alternative Investments
(Time: 15 Min.)
1. Compared to traditional investments, alternative investments are most likely to be more:
A. transparent
B. leveraged
C. liquid
Answer: B
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Alternative investments tend to u more leverage and are typically less liquid and less transparent than traditional investments.
2. A portfolio manager who adds hedge funds to a portfolio of traditional curities is most likely eking to:
A. increa expected returns only.
B. both increa expected returns and decrea portfolio variance.
C. decrea portfolio variance only.
Answer: B
For a portfolio of traditional curities, adding alternative investments such as hedge funds can potentially incre a the portfolio’s expected returns, becau the investments often have higher expected returns than traditional investments, and decrea portfolio variance, becau returns on the investments are less than perfectly correlated with returns on traditional investments.
3. Capital provided for companies beginning operation but before commercial manufacturing and sales have occurred best describes which stage in venture capital investing?
A. Seed-stage
B. Early-stage
C. Later-stage
五年级下册英语单词>加减乘除速算方法Answer: B
Early-stage financing is capital provided for companies moving into operation and before commercial manufacturing and sales have occurred.
4. Which of the following statements is least likely an advantage of investing in hedge funds through a fund of funds? Funds of funds provide:
A. an increa in expected return through diversification.
B. experti in lecting funds and conducting due diligence.
C. access to successful funds that may otherwi be clod to new investors.
Answer: A
Diversification results in risk reduction, not return enhancement. Further, the fees charged by the fund of funds manager will likely reduce returns relative to direct hedge fund investment.
5. Which classification of hedge funds is least likely to u a short position in stock as a part of its strategy?
A. Market-neutral funds.
B. Emerging-market funds.
C. Distresd curities funds.
Answer: B
Emerging-market funds invest in less liquid and less efficient asts of emerging markets that are difficult to short.
6. The period of time within which a hedge fund must fulfill a redemption request is the:
A. lockup period.
B) notice period.
C) withdrawal period.
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Answer: B
A notice period, typically 30 to 90 days, is the amount of time a fund has after receiving notice of a redemption request to fulfill the redemption request. A lockup period is a minimum length of time bef
ore an investor may redeem shares or make withdrawals.
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7. A typical hedge fund fee structure is least likely to include a:
A. ba fee.
B. high water mark.
C. negative incentive fee.
Answer: C
C is correct becau the fee structure can include a ba fee and “high water mark” but not a negative performance fee. The lowest performance fee would be zero.
8. A form of direct investment in mortgages is:
A. commercial mortgage-backed curities.
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B. whole loans.
C. mortgage real estate investment trusts.
Answer: B
Whole loans (i.e., commercial property mortgages) are considered direct investments. Commercial mortgage-backed curities (CMBS) and mortgage REITs are indirect investments.
9. A Canadian hedge fund has a value of C$100 million at the beginning of the year. The fund charges a 2% management fee bad on asts under management at the beginning of the year and a 20% incentive fee with a 10% hard hurdle rate. Incentive fees are calculated net of management fees. The value at the end of the year before fees is C$112 million. The net return to investors is clost to:
大口啃A. 10%.
B. 8%.
C. 9%.
Answer: A
Management Fee: C$100.0 × 2.0% = C$2.0 million
Gross value at end of year (given) = C$112.0 million
Incentive fee = [(C$112.0 − C$100.0 − C$2.0 − (C$100.0 × 10.0%)] × 20% = C$0
Total fee = C$2.0 million
Net of fee: C$112.0 − C$2.0 = C$110.0 million
islamistNet return = (C$110.0 / C$100.0) − 1 =10.0%
10. A hedge fund started with an initial investment of €75 million. The end-of-year value after fees for Year 1 was €70 million. For Year 2, the end-of-year value before fees is €90 million. The fund has a 2 and 20 fee structure. Management fees are paid independently of incentive fees and are calculated on end-of-year values. Incentive fees are calculated using a high water mark and a soft hurdle rate of 2%. Total fees paid for Year 2 are:
A. €4.4 million.
B. €5.8 million.
C. €4.8 million.
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Answer: C
Management fee = €90 million* 0.02 = €1.8 million.
Gross return = (€90/€75) − 1 = 20.0%. The soft hurdle rate was exceeded.
Becau of the high water mark, incentive fees are paid only on the increa in value above the previous high value of €75 million.
Incentive fee = (€90 million − €75 million) * 0.20 = €3.0 million.阿根廷别为我哭泣歌词
Total fee: €1.8 million + €3.0 million = €4.8 million.
