What to know
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
Hedge Funds practice questions
Hedge Funds 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 5 questions with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
Practice this topicHow to practice
Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
Review signal
Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.
Alternative Investments
Hedge Funds
Hedge fund manager Lena Okafor takes leveraged long and short positions in currencies, sovereign bonds, and equity index futures based on her views of central bank policy and global growth trends. Her strategy is most accurately classified as:
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Hedge Funds
Following heavy redemption requests during a market drawdown, a hedge fund invokes a provision in its offering documents that limits total investor withdrawals to 10% of fund assets in any single quarter. This provision is best described as a:
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Hedge Funds
A hedge fund's net asset value stands 30% below its high-water mark after two losing years, and most investor capital remains subject to the original fee terms. The fund's incentive fee structure most likely encourages the manager to:
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Hedge Funds
A hedge fund holds long positions in undervalued equities and short positions in overvalued equities within the same sector, targeting near-zero beta to the broad equity market. The strategy is best described as:
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Hedge Funds
A hedge fund reports unusually smooth monthly returns despite holding hard-to-value distressed securities and using side pockets. The appraisal issue most likely affecting performance analysis is:
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