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Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Alternative Investments
2. Alternative Investment Performance and Returns practice questions
2. Alternative Investment Performance and Returns is part of CFA Level I Alternative Investments. Alternative Investments questions emphasize private capital, real estate, infrastructure, natural resources, hedge funds, digital assets, and performance measurement. Use this page to review the controlling ideas, then work through 9 questions with answer explanations and common traps.
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Alternative Investments
2. Alternative Investment Performance and Returns
Appraisal-based valuation of private real estate most likely causes reported returns to appear:
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2. Alternative Investment Performance and Returns
A hedge fund database that includes only funds still operating at the end of the sample period is most likely affected by:
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2. Alternative Investment Performance and Returns
The return measure that incorporates both distributions already received and residual value still held, but ignores the timing of cash flows, is best described as:
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2. Alternative Investment Performance and Returns
A fund begins the year with USD50 million and ends the year with USD58 million before fees. The manager charges a 2% management fee on beginning assets and a 20% incentive fee on gains remaining after the management fee. The investor net return is closest to:
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2. Alternative Investment Performance and Returns
A private capital fund has paid-in capital of USD40 million, cumulative distributions of USD28 million, and residual value of USD36 million. The multiple of invested capital is closest to:
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2. Alternative Investment Performance and Returns
A project requires an initial investment of USD100 million and is expected to distribute USD40 million at the end of Year 1 and USD80 million at the end of Year 2. The IRR is closest to:
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2. Alternative Investment Performance and Returns
A hedge fund begins the year at USD200 million and ends the year at USD232 million before fees. The high-water mark is USD215 million. The fund charges a 1% management fee on ending gross value and a 20% incentive fee. The hurdle rate is 5%, and incentive fees and hurdle considerations are determined after management fees. The investor net return is closest to:
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2. Alternative Investment Performance and Returns
An analyst observes that a private real estate index has a high Sharpe ratio and very low monthly volatility. The most appropriate interpretation is that the analyst should:
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2. Alternative Investment Performance and Returns
A newly launched hedge fund reports five years of prior returns to a commercial database only after its strong early record becomes marketable. The bias most directly illustrated is:
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