Test On Alternative Investments For CFA Level 1

10 Questions | Total Attempts: 2160

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Test On Alternative Investments For CFA Level 1

There are 10 questions in this test from the Alternative Investments section of the CFA Level 1 syllabus. You will get 15 minutes to complete the test.


Questions and Answers
  • 1. 
    Following table shows the various fees charged by FUND A and FUND B. Which fund will you suggest to your friend for investment over a 2 year period?
    • A. 

      Fund A

    • B. 

      Fund B

    • C. 

      Fund C

  • 2. 
    Mr. Ramchandra Huha is planning to buy a office premises with 5000 Sqft carpet area. He forsees a potential Net operating income from the building at $10,000/month. How much would Mr. Huha will be willing to pay for this property if his estimated capitalization rate is 8%
    • A. 

      $ 125,000

    • B. 

      $ 1,500,000

    • C. 

      $ 1,250,000

  • 3. 
    A Deeya Limited is planning to grow in the area of energy storage devices. Deeya has already developed the product and has filed more than 10 patents while the process of development of most efficient energy storage device. The company has also hired a very good production team and completed the pilot production. The product of pilot production was hugely successful. Now Deeya, want to set up a complete facility for the production of the efficient energy storage device. They approached a fund for the investment into the company. Which type of the fund the company should approach?
    • A. 

      Seed Stage Funds

    • B. 

      Mezzanine Funds

    • C. 

      Growth Capital Funds

  • 4. 
    Which of the following is not a Key Benefit of the In-kind process used by the ETFs?
    • A. 

      The in-kind creation and redemption feature keeps market prices of ETF shares close to NAV and avoids the premiums and discounts typical for closed-end funds

    • B. 

      It doesn’t provide the exchange participants an opportunity for arbitrage between the shares of stock that make up the fund and shares of the fund

    • C. 

      There is a tax advantage to in-kind redemption. If the fund distributes shares as a redemption method, any capital gains on the shares are realized at their sale

  • 5. 
    Which of the following statement is false about the open ended and close ended mutual funds?
    • A. 

      Open-end investment companies are funds that continue to sell and repurchase shares after their initial public offerings

    • B. 

      Closed-end investment companies does not issue or redeem shares after the initial offering

    • C. 

      The share price of an open-end fund will always equal the NAV and the share price of a closed-end fund shall always trade at a premium to the actual NAV

  • 6. 
    A company is considering the purchase of a small office building and, as part of his analysis, must calculate the NOI. The information on the buildings as follows: • Gross potential rental income: $300,000 • Estimated vacancy and collection loss rate: 3% • Insurance: $10,000 • Taxes: $5000 • Depreciation: $ 10,000 Based on the abovementioned Data what could be the NOI of the Building
    • A. 

      $ 266,000

    • B. 

      $ 276,000

    • C. 

      $ 275,000

  • 7. 
    A commodity based mutual fund has following holding: If mutual fund is being traded at an NAV of 20, how many units of mutual fund are there?
    • A. 

      15000

    • B. 

      15102

    • C. 

      14995

  • 8. 
    Closed-end funds are generally traded at
    • A. 

      Discount to their NAVs

    • B. 

      Premium to their NAV’s

    • C. 

      At par to their NAV’s

  • 9. 
    Harbhajan khan spent $2310 on purchasing 120 units of a mutual fund. If fund unit has a NAV of 18 then load percentage is close to
    • A. 

      7%

    • B. 

      6.5%

    • C. 

      6

  • 10. 
    Which of the following statement is most correct about the characteristic of fund investment?
    • A. 

      A fund manager who is investing in high RoE stock is pursuing a Sector strategy

    • B. 

      Investments of a fund concentrated in Power sector. Investment Manager would be said to follow the Style Strategy

    • C. 

      An Index fund tries to match the performance of the designated Index such as S&P 500

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