CAIA LEVEL 1 MOCK EXAM 1 AND 2 AND CAIA ACTUAL LEVEL 2 EXAM (ALL 3 EXAMS) WITH 300 EXAM QUESTIONS AND 100% CORRECT ANSWERS GRADED A(BRAND NEW!!)
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Module
CAIA LEVEL 1 AND CAIA LEVEL 2
Institution
CAIA LEVEL 1 AND CAIA LEVEL 2
CAIA LEVEL 1 MOCK EXAM 1 AND 2 AND CAIA ACTUAL LEVEL 2 EXAM (ALL 3 EXAMS) WITH 300 EXAM QUESTIONS AND 100% CORRECT ANSWERS GRADED A(BRAND NEW!!)
Blair Kuhnen, CAIA, is analyzing different measures of risk-adjusted performance
and has heard about a particular ratio, the Sortino ratio, which is...
CAIA LEVEL 1 MOCK EXAM 1 AND 2 AND CAIA
ACTUAL LEVEL 2 EXAM (ALL 3 EXAMS) WITH
300 EXAM QUESTIONS AND 100% CORRECT
ANSWERS GRADED A(BRAND NEW!!)
Blair Kuhnen, CAIA, is analyzing different measures of risk-adjusted performance
and has heard about a particular ratio, the Sortino ratio, which is especially useful
in analyzing alternative investments. How would the numerator and denominator
be best stated in the Sortino ratio formula? - ANSWER-Numerator subtracts a
target return from the portfolio return. Denominator uses target semistandard
deviation.
Mary Coolidge, CAIA, is analyzing returns and how to properly evaluate them.
What is the goal of an investment program with a relative return standard? -
ANSWER-Generate returns that move with a particular market, with the goal to
consistently outperform that market.
Kyle Marsh is the manager of a large institutional portfolio. He is considering
adding digital assets to his portfolio. Which of the following features is not one of
the clear benefits that Marsh should expect from adding digital assets? -
ANSWER-Inflation hedge.
How is Metcalfes law expressed? - ANSWER-n (n - 1) / 2
A hedge fund manager uses standardized unexpected earnings (SUE) to identify
investment opportunities. If EPS represents earnings per share, which of the
following formulas illustrates a common example of how SUE is calculated? -
ANSWER-(EPS - analysts' average EPS) / (standard deviation of earnings' misses).
,The Ethereum Classic blockchain that was created following the Ethereum hack is:
- ANSWER-the original pre-hack Ethereum blockchain that existed before the
fork.
Regarding alternative investment fund structures, a common characteristic specific
to drawdown funds is that: - ANSWER-Each investor commits a certain amount of
capital.
First Interstate Bank is considering making a commercial real estate loan to a firm
for a business expansion. This debt would be classified as senior debt and it would
be collateralized by a commercial property. What is the typical cap on a bank's
loan-to-value (LTV) ratio on this type of loan, and as First Interstate assesses the
credit risk of this loan, how is the interest coverage ratio defined? - ANSWER-
LTV cap = 75%. Interest coverage ratio = property's net operating income / loan's
interest payments.
How do you calculate the required rate of return for a project? - ANSWER-Risk
free rate + Liquidity premium + Required risk premium
Which of the following best characterizes a return distribution that has less kurtosis
than a normal distribution? - ANSWER-Platykurtic.
Which of the following statements is correct relative to the term structure of
implied forward rates? - ANSWER-The term structure of forward rates will plot
above the spot rate curve when rates are upward sloping.
With regard to commodity futures contracts, which of the following statements
concerning margin is most accurate? - ANSWER-The maintenance margin is the
amount of margin that must be maintained in a futures account and is usually set at
75-80% of the initial margin.
,Which of the following options strategies would be most appropriate for an
investor wishing to protect against a security price decline but benefit from an
unlimited security price appreciation? - ANSWER-Protective put.
Which of the following best defines value at risk (VaR)? - ANSWER-The
maximum loss over a defined period of time at a stated level of significance, given
normal market conditions.
The method in which regression estimates are derived by minimizing the sum of
squared residuals is best known as: - ANSWER-ordinary least squares (OLS).
Analysts Bill Shears and Penny Rhodes recently derived benchmarks for a hedge
fund. Shears concludes that benchmark comparisons can be complicated because
drivers of benchmark returns must match those of the fund. Rhodes concludes that
benchmark comparisons can be complicated because tests must be run to determine
if incremental performance is attributable to skill or luck. Regarding the
conclusions reached by Shears and Rhodes: - ANSWER-both Shears and Rhodes
are correct.
A managed futures fund manager has been transitioning operations toward highly
complex managed futures strategies, many of them involving thinly traded futures
markets. The manager continually searches for strategies with high levels of
potential alpha. Which of the following best describes the hedge fund manager's
strategy? - ANSWER-Product innovator.
An analyst is concerned that the trading strategy she recently identified has
generated a statistically insignificant result and has asked for guidance in assessing
the strategy. A result is statistically significant if it is: - ANSWER-unlikely to have
occurred merely by chance, and the p-value is less than the significance level.
, In hypothesis testing, the confidence level equals: - ANSWER-1 minus the
significance level.
With respect to issues in sampling and testing, which of the following is a primary
problem with data dredging? - ANSWER-Too much confidence is placed on the
results.
What type of instrument is a commodity-linked note (CLN), and what is a key
advantage of issuing a CLN? A CLN is a(n) - ANSWER-intermediate-term debt
instrument with the key advantage of allowing a commodity-producing issuer a
way to match the risks of assets and liabilities.
Which of the following best describes a forward market in contango? - ANSWER-
The forward price is greater than the spot price and the term structure is upward
sloping.
In a forward contract, what term is used to refer to the difference between the spot
price of the referenced asset and the price of a forward contract? - ANSWER-
Basis.
A fund manager is educating a client about the complexities that surround futures
returns, spot returns, and roll return. The client is trying to determine when to roll
his commodity futures contracts at the optimal time relative to settlement and
wishes to maintain continuous long-term exposure. Which of these statements is
the most accurate regarding roll return? - ANSWER-All futures contracts provide
roll return.
How would the correlation between commodity prices and inflation be compared
with the correlation between stock prices and inflation? - ANSWER-Commodity
prices are positively correlated with inflation, but stock prices tend to be negatively
correlated with inflation.
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