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Flashcards in SS 18. Alternative Investments Deck (22)
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1

The shares of closed-end funds are:

listed on a stock exchange.

2

An investor may prefer investing into a fund of hedge funds rather than a single hedge fund if they seek:

Due diligence expertise

3

The real estate index most likely to suffer from sample selection bias is a(n):

repeat sales index


Only properties that sell in each period and are included in the index and vary over time which may not be representative of the whole market.

4

The (highest/lowest) risk infrastructure investments have higher dividend payout ratios

Lowest

5

Capital provided for companies moving toward operation but before commercial manufacturing and sales have occurred best describes which stage in venture capital investing?

Early stage

6

A commodity market is in contango when futures prices are:

higher than the spot price.

7

The three main approaches to valuing real estate are:

cost, comparative sales, and income

8

Value at Risk (VaR) is defined as:

the minimum amount of loss expected over a given time period at a given probability level.

9

In comparison to traditional assets, alternative investments tend to invest into:

(Liquid/illiquid) assets

Utilise (higher/lower) degrees of leverage

charge (higher/lower) fees.

illiquid assets

higher degrees of leverage

higher fees

10

___________ ________ is an equity strategy that uses technical analysis to identify over- and underpriced securities, buy the underpriced ones, and short the overpriced ones.

Quantitative directional

11

A private equity firm sells a portfolio company to a buyer that is active in the same industry as the portfolio company. This transaction is best described as a:

Trade Sale

12

Capital provided for companies moving toward operation but before commercial manufacturing and sales have occurred best describes which stage in venture capital investing?

Early stage

13

The income approach uses net operating income (after/before) financing and income taxes

Before

14

The total expense ratio of an investment company is generally:

inversely proportional to the increase in assets under its management.

15

Management fees for a private equity fund are based on the:

total committed capital minus capital returned from investments that are exited

16

Alternative investments that rely on estimates rather than observable market prices for valuation purposes are most likely to report:

volatility of returns that is understated.

17

List the types of risk that use of derivatives introduces (4):

Operational (settlement)

Financial

Counterparty

Liquidity

18

The market approach to valuing portfolio companies in private equity firms is based on:

Multiples

The market approach to valuing portfolio companies uses multiples of different measures that are compared with similar companies.

19

The (highest/lowest) risk infrastructure investments have more stable cash flows

Lowest

20

Which of the methods to value property uses a discounted cash flow valuation approach?

Income method

21

Market Value =

Net Operating Income
/
Market capitalization rate

22

The real estate valuation method that uses a discounted cash flow model is:

Income approach