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Alternative Investments MCQ - Alternative Investments Section 1

31 When future prices are higher than the spot price, the commodity forward curve is:

A downward sloping curve occurs when the futures prices are lower than the spot price. This condition is called backwardation.

32 The difference between the spot price of a commodity and the price specified by its futures contract:

Roll yield refers to the difference between the spot price of a commodity and the price specified by its futures contract.

33 Which of the following is least likely to be a characteristic associated with alternative investments?

Alternative investments are associated with limited portfolio transparency

34 Which of the following is least likely to be correct about hedge fund valuation?

Bid prices are used for long and ask prices are used for shorts.

35 A minority equity investment in more mature companies looking to enter new markets is most likely to be known as:

Development capital refers to minority equity investment in more mature companies looking to enter new markets.

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Private Equity

Private equity involves investing in companies that are not publicly traded. Investors generally seek returns through operational improvements, business growth, restructuring, or an eventual sale of the investment.

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Two analysts are discussing the benefits of investing in commodities Analyst 1 says: commodity prices have historically been correlated with inflation and hence provide a good inflation hedge.…

A. Only Analyst 1 is correct.
B. Only Analyst 2 is correct.
C. Both analysts are correct.

Correct answer: C

Explanation:

Both analysts are correct.

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