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CAIA Level 1 Practice Questions and Answers
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CAIA Level 1 Practice Questions and Answers
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CAIA Level 1 Practice Questions andAnswers
Which of the following investments is most likely to be considered an
institutional quality alternative investment?
A. Vintage Wine Collection
B. Long/Short Equity Hedge Fund
C. High-Yield Corporate Bond Fund
D. Small Cap Equity Index Fund - -B. Institutional-quality alternative
investments exhibit risk and return characteristics that are acceptable to
institutional investors. Institutional investors have risk and return objectives
that prevent them from investing in very small or highly speculative assets,
but as a group, are generally able to invest in the four categories of
alternative investments. A long/short equiyt hedge fund fits within the
requirements of institutional-quality alternative assets.
Institutionas may also invest in high-yield bonds or small cap stocks, but
these would be considered traditional rather than alternative
-Which of the following alternative asset classes would grant an investor
with a long position direct control of a nonfinancial asset representing actual
consumption rights?
A. Real Assets
B. Hedge Funds
C. Private Equity
D. Structured Products - -A. Real Assets are associated with investments
that directly control nonfinancial assets and represent actual rights to
consumption rather than indirect financial claims to cash flows generated by
a firm. Real Assests include real estate, infrastructure, intellectual property,
natural resources and commodities
-The CIO of the Bentley Endowment has given his managers a directive to
increase the allocation of the portfolio's funds into alternative investments.
Which of the following statements will be least beneficial in meeting this
directive?
A. Small-Cap Stock Funds
B. A long/short hedge fund
C. Intellectual Property Investments
D. A distressed debt private equity fund - -A. Small-cap stock funds are a
type of mutual fund that , while likely riskier than large and mid-cap funds,
will still fall into the traditional investment category.
A long/short hedge fund, intellectual property, and a distressed debt private
equity fund are all considered alternative investments.
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