Alternative Investments - Alternative Investments Section 2
41. A top-down approach is emphasized in which of the following hedge fund strategies?
- Option : C
- Explanation : A real estate investor will invest in shares of real estate investment trusts as they are traded on exchanges and represent an equity investment in real estate.
43. A unique risk associated with equity investing in property development is:
- Option : C
- Explanation : Both A and B are risks that could affect the value of existing properties as well as the property in development. But difficulty in obtaining long term financing is a risk that is only associated with the property development.
44. Which of the following real estate valuation methods uses a discounted cash flow model?
- Option : B
- Explanation : The income approach uses a discounted cash flow model to value real estate.
45. Which of the following real estate indices is most likely to suffer from sample selection bias?
- Option : A
- Explanation : Repeat sales index suffers from sample selection bias because it is highly unlikely that the same properties come up for repeat sales every year.
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