Alternative Investments

Question 1

What are the basic RE forms and within them?
What are core property RE types?

Answer 1

Question 2

What are non-core property types?
How can RE be invested in (four types)?

Answer 2

Question 3

What are the characteristics of RE?

Answer 3

Question 4

What are the valuation risk factors for RE?

Answer 4

Question 5

What are the property operation risk factors?

Answer 5

Question 6

RE cashflow is a function of what?

Answer 6

Question 7

How do economic factors affect retail, office, industrial, multi-family and Hotel?

Answer 7

Question 8

What role does RE have in an investment portfolio (what does it offer)?

Answer 8

5/ Tax Benefits - depreciation tax shield for direct
investments, elimination of corporate tax for REITs as long as a min. amount of taxable income is paid as a div.

Question 9

What is the risk/return profile of RE relative to other investment types?

Answer 9

Question 10

What comes under the classifications of Office, Industrial and Retail?

Answer 10

Question 11

What comes under classifications of Hospitality and other speciality ?

Question 12

What are the different lease types?

Answer 12

Question 13

Investment characteristics of Office and industrial RE?

Answer 13

Question 14

Investment characteristics of Retail and multi-family?

Answer 14

Question 15

What are the considerations in DD for private investment?

Answer 15

Question 16

DD considerations for investing in REIT (public)?

Answer 16

Question 17

How do appraisal based indexes calculate returns?

Answer 17

Question 18

What are the two transactions indexes?

Answer 18

Question 19

Pros and cons of appraisal and transaction indexes?

Answer 19

Question 20

What are the three valuation approaches for RE investments

Answer 20

Question 21

Explain what is meant by “highest and best use”?

Answer 21

Question 22

What is the direct capitalization method and how to interpret what a higher and lower cap rate means? Difference between going-in and terminal cap rate?

Answer 22

Question 23

Can NOI growth rate not equal the implicit g in the cap rate? What would stabilized NOI include?

Answer 23

Question 24

Explain the DCF method of RE valuation?

Answer 24

Question 25

Describe equity and mortgage REITS? Describe REOCs?

Answer 25

Question 26

What are main CFs fo REOC's and what do they usually do with CFs? Describe the usual structures of REITS?

Answer 26

Question 27

What are the pros and cons of REITS?

Answer 27

Question 28

Describe NAVPS premium and discount and what are the different measurements for RE under IFRS vs GAAP?

Answer 28

Question 29

How is NAVPS calculated?

Answer 29

Question 30

NAV reflects value to which type of buyer? What are the issues with NAV

Answer 30

Question 31

How is FFO and AFFO calculated?

Answer 31

Question 32

Compare AFFO vs FFO and what are the relative valuation measures?

Answer 32

Question 33

What are the main drivers of multiples?

Answer 33

Question 34

Which is the most widely accepted multiple and what are the disadvantages of it?

Answer 34

Question 35

Summary of pros and cons of private vs public RE investments

Answer 35

Question 36

What are the different stages in VC and what are the types of buyouts? Who are the investors in PE firms?

Answer 36

Question 37

What are the valuation techniques used and what are the other considerations?

Answer 37

Question 38

How can value be created by re-engineering private firms and from greater access to credit markets?

Answer 38

Question 39

How can value be created from alignment of interests ?

Answer 39

Question 40

What other methods can be used to align interests?

Answer 40

Question 41

What is the difference between BO vs VC in terms CF volatility, market position, asset base, management and leverage?

Answer 41

Question 42

Difference between buyout vs VC in terms of risk measurement, exit, previous trading history , WC needs, due diligence, monitoring by PE firm and variability in returns?

Answer 42

Question 43

Buyout firms vs VC firms, what type of transactions are BO vs VC and what do each derive most of their revenue from?

Answer 43

Question 44

What are the 6 characteristics that BO targets usually possess?

Answer 44

Question 45

What are the three types of buyouts and what is needed in an LBO model/ what inputs go into the PV(Max price)?

Answer 45

Question 46

What are the potential additional sources of value in a buyout?

Answer 46

Question 47

Explain the VC method and post and pre money valuation formula ?

Answer 47

Question 48

Example vc method calc?

Answer 48

Question 49

Explain VC method when there is existing stock options?

Answer 49

Question 50

What is stage financing used for and example of calc?

Answer 50

Question 51

What are the four exit routes for VC?

Answer 51

Question 52

What are the general PE risk factors?

Answer 52

Question 53

What are the general PE costs?

Answer 53

Question 54

What are two main differentiating factors of public vs private equity? What do PE funds need expertise?

Answer 54

Question 55

Explain the usual timeline of a PE fund?

Answer 55

Question 56

What are the economic terms

Answer 56

Question 57

What are the key governance terms?

Answer 57

a) key man clause

Question 58

What is the main focus of due diligence?

Answer 58

Question 59

What are the 6 methods of PE fund valuation?

Answer 59

Question 60

Explain IRR and the PIC, DPI, RVPI, TVPI multiples and how are they presented?

Answer 60

Question 61

What is a commodity and which are soft and hard?

Answer 61

Question 62

How do commodities offer diversification, how to they derive their value and what are the 6 sectors?

Answer 62

Question 63

Properties of crude oil?

Answer 63

Question 64

Properties of natural gas?

Answer 64

Question 65

Properties of refined products?

Answer 65

Question 66

Properties of the grains and industrial sector

Answer 66

Question 67

Properties of live stock and precious metals sector

Answer 67

Question 68

Properties of cash crops

Answer 68

Question 69

Explain the production cycle for energy

Answer 69

Question 70

Explain how refineries, pipelines and exploration affect crude S&D? What are the standard contracts for gas, gasoline and natural gas

Answer 70

Question 71

Explain the production process for industrial/precious metals

Answer 71

Question 72

Industrial/precious metals production process continued

Answer 72

Question 73

Explain the production processes for livestock?

Answer 73

Question 74

Explain the production process for grains

Answer 74

Question 75

Explain the production process for softs

Answer 75

Question 76

What are the differences in valuation between commodities and stocks & bonds?

Answer 76

Question 77

Who are the main participants in commodity markets

Answer 77

Question 78

What is the difference between spot an futures price, what is the calendar spread, what does backwardation and contango mean

Answer 78

Question 79

What are the trading strategies under backwardation and contango

Answer 79

Question 80

What is the insurance (keynes) theory on futures curve shape?

Answer 80

Question 81

What is the hedging pressure hypothesis

Answer 81

Question 82

What is the theory of storage?

Answer 82

Question 83

What are the main components of futures returns

Answer 83

Question 84

how is roll return calculated?

Answer 84

Question 85

What is collateral return

Answer 85

Question 86

How does roll return differ by sector

Answer 86

Question 87

What is a commodity swap and why may an investor want one

Answer 87

Question 88

Example of how commodity swap works

Answer 88

Question 89

What is a total return swap, basis swap, variance swap and volatility swap

Answer 89

Question 90

What is a commodity index and how do they differ based on breadth of coverage, relative weighting, rolling methodology, rebalancing of weights

Answer 90

Question 91

How do index differ on governance, what two things should the index be,

Answer 91

Question 92

Describe the S&P GSCI and BCOM indexes?

Answer 92

Question 93

Describe the Deutsche Bank Liquid, TR/CC CRB and RICI indexes and what are their rebalancing frequencies

Answer 93