<div>CAIA - Questões de Investimento Alternativo</div> | Take the Quiz

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Alternative Investment Strategies Quiz

Test your knowledge on alternative investment strategies, including private equity, commodities, and real estate. This quiz is designed for finance professionals and enthusiasts looking to deepen their understanding of complex investment vehicles.

Explore key differences between RMBS and CMBS.
Understand market-neutral strategies.
Assess the advantages of REITs.

10 Questions2 MinutesCreated by InvestingEagle512

1- Jim Ramsey has always bought residential mortgage-backed securities (RMBS) for his portfolio but is now considering the purchase of a commercial mortgage-backed security (CMBS). A key difference between the two types of securities is that:

A) the commercial loans backing the CMBS are not collateralized, unlike those used in a RMBS.

B) CMBS have greater default risk in part because the underlying loans are less standardized.

C) loan to value ratios in the CMBS market range from 25% to 30%, compared to 60% to 75% in the RMBS market.

D) RMBS have tranches and CMBS do not.

2- Over the course of the year, gold prices increased by 10% while the overall equity market was up only 3%. Based on recent historical evidence regarding gold and gold mining firms, an investor in the equity of a gold mining firm will likely expect that the returns for the year will be:

A) less than -10%.

B) between 3% and 10%.

C) between -10% and 3%.

D) greater than 10%.

3- Which of the following is least likely to be an advantage of real estate investment trusts (REITs)?

A) REITs are liquid, open-end funds with investors subscribing and redeeming shares directly from the fund.

B) REITs pay significant distributions to investors.

C) REITs do not pay corporate taxes.

D) REITs allow investors to easily adjust their strategic asset allocation to include real estate.

4- Which of the following is TRUE regarding interest rates, storage costs, and commodity forwards contract pricing?

A) Higher storage costs and higher interest rates will result in higher forwards prices.

B) Lower storage costs and lower interest rates will result in higher forwards prices.

C) Lower storage costs and higher interest rates will result in lower forwards prices.

D) Higher storage costs and lower interest rates will result in lower forwards prices.

5- Which of the following comparisons between venture capital and LBOs is correct?

A) LBOs typically have a higher level of debt and a higher level of risk than venture capital.

B) Venture capital typically contains a lower level of debt and a higher level of risk than LBOs.

C) LBOs typically contain a lower level of debt and a higher level of risk than venture capital.

D) Venture capital typically contains a higher level of debt and a higher level of risk than LBOs.

6- Private equity that combines features of private debt and equity financing is known as:

A) mezzanine financing.

B) crossover financing.

C) distressed debt investing.

D) leveraged buyouts (LBOs).

7- Which of the following best describes a market neutral strategy? The manager:

A) exposed to market risk, industry risk, and security selection risk.

B) eliminates market and industry risk and generates a long run return similar to the risk-free rate.

C) eliminates market and industry risk and generates a return from security selection.

D) eliminates market risk but not industry risk as industry exposure generates the return.

8- Which of the following is NOT a component of the arbitrage income portion of the return on a convertible arbitrage strategy?

A) Minus short stock rebate.

B) Minus stock dividend.

C) Plus bond interest.

D) Minus financing expense.

9- An option that has a payout that is based on either the largest or smallest difference between the strike price and the underlying asset price is most likely a(n):

A) Asian option.

B) Binary option.

C) Quanto option.

D) Look-back option.

10- Which of the following would be the least likely method to unwind a CDS transaction?

A) Prepay the premiums and deliver the asset.

B) Enter into an offsetting position.

C) Assign the contract to another party.

D) Terminate the contract.

CAIA - Questões de Investimento Alternativo

Alternative Investment Strategies Quiz

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