Alternative Investments - Alternative Investments Section 1

Avatto > > CFA Level 1 > > PRACTICE QUESTIONS > > Alternative Investments > > Alternative Investments Section 1

26. Which of the following is the most liquid alternative investment?

  • Option : C
  • Explanation : Exchanged traded funds are publically traded and thus provide liquidity
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27. Which of the following hedge fund strategies is least likely categorized as an event-driven strategy?

  • Option : C
  • Explanation : Distressed debt and merger arbitrage are event driven strategies.
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28. Which of the following characteristics of a target company is most likely attractive for a leveraged buyout?

  • Option : C
  • Explanation : Strong and sustainable cash flow is an attractive feature of a target company in a leveraged buyout
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29. The futures price of wheat is higher than the spot price. This is most likely to be referred to as:

  • Option : C
  • Explanation : Contango is when the futures price of a commodity is above the spot price.
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30. Which of the following is most likely to be correct for commodities?

  • Option : A
  • Explanation : B is incorrect because commodity derivatives are effective hedges against inflation. C is incorrect because commodity derivatives can be traded over the counter. Furthermore, commodity derivatives include options and swaps.
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