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AWMA EXAM 3 QUESTIONS AND ANSWERS 2024
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AWMA EXAM 3 QUESTIONS AND ANSWERS 2024
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AWMA EXAM 3 EXAM 2024ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
The CAIA divides hedge funds into four main categories. Which of the following
strategies is NOT one of these four main approaches?
A)Corporate restructuring
B)Opportunistic
C)Market directional
D)Mezzanine financing - ANSWERS-D) The four main hedge fund categories are
market directional, corporate restructuring, convergence trading, and opportunistic.
Mezzanine financing is a private equity strategy. Mod 3
QUESTION 2
Which one of these various types of potential private equity investments would
generally be considered the most risky when compared to the others?
A)Distressed debt
B)LBOs
C)Venture capital
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, AWMA EXAM 3 EXAM 2024
D)Mezzanine financing - ANSWERS-C) Venture capital is generally considered
the riskiest, and has the highest target return range. Mod 3
QUESTION 3
Futures contracts are available on
A)all of the these.
B)the weather.
C)home prices.
D)foreign currencies. - ANSWERS-A) Futures contracts are available on foreign
currencies, home prices (S&P CoreLogic Case-Shiller Index), and the weather
(such as temperature changes and rainfall). Mod 3
QUESTION 4
"Carried interest" in a hedge fund refers to
A)undistributed interest income from bonds.
B)side pockets.
C)incentive fees.
D)management fees. - ANSWERS-C) Incentive fees (typically 20%) are referred
to as carried interest, and are taxed as capital gains. Mod 3
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, AWMA EXAM 3 EXAM 2024
QUESTION 5
Academic studies have shown that managed futures often have a low correlation
with traditional assets and can be a good diversifier for an investment portfolio.
Which of the following has had the most impact in limiting the effectiveness of
using managed futures in portfolios?
A)Low turnover
B) Low correlations
C)High fees
D)High correlations - ANSWERS-C) High fees have offset much of the
diversification benefit achieved by various managed futures funds. Mod 3
QUESTION 6
Which of the following is not a form of leveraged buyout (LBO)?
A)Repackaging plan
B)Cut and run
C)Leveraged build-up
D)Employee stock ownership plan (ESOP) - ANSWERS-D) Employee stock
ownership plans (ESOPs) are a form of employee benefit plan that may use
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, AWMA EXAM 3 EXAM 2024
leverage, but the main goal is usually to provide departing owners with a ready
market for the privately held shares.
QUESTION 7
The stage of venture capital that is characterized by beta testing and free samples is
known as
A)first stage.
B)seed capital.
C)second stage/expansion capital.
D)mezzanine stage. - ANSWERS-B) Market testing is carried out at the seed stage,
which involves beta testing a prototype and free samples. Mod 3
QUESTION 8
Which of the following are reasons that second-to-die policies are attractive for
estate planning?
I.One second-to-die policy will be cheaper than two single life policies.
II.The underwriting focuses on the younger, and perhaps healthier insured person.
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