Alternative Investments

Real Estate and Infrastructure practice questions

Real Estate and Infrastructure 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 topic

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.

How 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.

Easy

Alternative Investments

Real Estate and Infrastructure

An equity real estate manager acquires an apartment complex with elevated vacancy, plans targeted renovations and re-leasing, and expects to sell once occupancy stabilizes. This strategy is best classified as:

Moderate

Alternative Investments

Real Estate and Infrastructure

An appraiser values an office property using the income approach. A comparable property recently sold for USD12.5 million and generates annual net operating income of USD875,000. The subject property has potential gross income of USD1,600,000, vacancy and collection losses of 6% of potential gross income, and operating expenses of USD454,000. The value of the subject property is closest to:

Very Difficult

Alternative Investments

Real Estate and Infrastructure

An infrastructure analyst compares three assets: a school facility receiving fixed availability payments from a government counterparty, a regulated water utility with inflation-linked tariffs, and an unregulated toll road whose revenue depends entirely on traffic volumes. The most accurate ranking of expected cash flow variability, from lowest to highest, is:

Moderate

Alternative Investments

Real Estate and Infrastructure

A pension plan wants exposure to stabilized office properties but requires daily liquidity and small ticket sizes. The most appropriate implementation is most likely:

Moderate

Alternative Investments

Real Estate and Infrastructure

An asset has high upfront capital costs, long operating life, essential-service demand, and revenue partly linked to inflation through regulation or concession agreements. The asset is best classified as: