Alternative Investments Q5

Alternative investments (such as hedge funds, private equity, real estate, commodities, etc.) are least likely to be characterized by high transparency. Here's a breakdown:

• A. Fees – Alternative investments typically have higher fees than traditional investments. For example, hedge funds often follow a "2 and 20" fee structure (2% management fee and 20% performance fee).

• B. Illiquidity – These investments are often less liquid, meaning it can be harder to sell them quickly without affecting the price.

• C. Transparency – Alternative investments generally have lower transparency compared to traditional investments like stocks or bonds. They are not as heavily regulated and do not disclose information as frequently or in as much detail.

Thus, they are least likely to be characterized by higher transparency.

✅ Correct Answer: C. transparency