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Q 2019 - Mock Question - PM

This document contains multiple choice questions about investing in alternative investments such as hedge funds, private equity, and real estate. The questions cover topics like the differences between American and European call options, characteristics of alternative investments compared to stocks and bonds, advantages of fund of funds, concerns around liquidity for different asset classes, appropriate public market vehicles for real estate exposure, biases that can occur in alternative investment indexes, the purpose of high-water marks in hedge fund incentive fees, and the definition of value at risk as it relates to alternative investments.

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Nghiem Nguyen Vinh
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38 views2 pages

Q 2019 - Mock Question - PM

This document contains multiple choice questions about investing in alternative investments such as hedge funds, private equity, and real estate. The questions cover topics like the differences between American and European call options, characteristics of alternative investments compared to stocks and bonds, advantages of fund of funds, concerns around liquidity for different asset classes, appropriate public market vehicles for real estate exposure, biases that can occur in alternative investment indexes, the purpose of high-water marks in hedge fund incentive fees, and the definition of value at risk as it relates to alternative investments.

Uploaded by

Nghiem Nguyen Vinh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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22 2019 Level I Mock Exam PM

112 For a stock that pays no dividends, the value of an American call option is most
likely:
A the same as the value of a European call option with otherwise identical
features.
B greater than the value of a European call option with otherwise identical
features.
C less than the value of a European call option with otherwise identical
features.
113 Which of the following attributes is least likely to be a requirement for the exis-
tence of riskless arbitrage? The underlying security:
A can be sold short.
B is a financial asset.
C is relatively liquid.
114 Compared with long-­only investments in stocks and bonds, alternative invest-
ments are most likely characterized by less:
A flexibility to use derivatives.
B manager specialization.
C transparency.
115 Which of the following least likely describes an advantage of investing in hedge
funds through a fund of funds? A fund of funds may provide investors with:
A access to due diligence expertise.
B lower fees because of economies of scale.
C access to managers who can negotiate better redemption terms.
116 Illiquidity is most likely a major concern when investing in:
A real estate investment trusts.
B private equity.
C commodities.
117 A real estate investor looking for equity exposure in the public market is most
likely to invest in:
A real estate limited partnerships.
B shares of real estate investment trusts.
C collateralized mortgage obligations.
118 Which of the following statements concerning the historical record of alterna-
tive investments is most likely correct?
A The exclusion of returns of funds that have been liquidated leads to an
upward bias in index performance.
B The use of appraised values instead of market prices leads to an upward bias
in volatility.
C The inclusion of previous return data for funds that enter the index leads to
a downward bias in index performance.
119 High-­water marks are typically used when calculating the incentive fee on
hedge funds. They are most likely used by clients to:
A avoid prime brokerage fees.
B avoid paying twice for the same performance.
C claw back the management fees.
120 The value at risk of an alternative investment is best described as the:
2019 Level I Mock Exam PM 23

A probability of losing a fixed amount of money over a given time period.


B minimum amount of loss expected over a given time period at a given prob-
ability level.
C time period during which a fixed amount is lost at a given probability level.

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