CAIA Level 2 Questions and Answers 100% Accurate.

Meta risks are qualitative risks not captured by specific and measurable financial risks. events. - ANSWER-They include organizational and human behavior, moral hazard, the misuse and excessive dependence on quantitative methods, market interaction, and extreme capital market A distressed securities strategy is most likely to earn returns from liquidity risk. - ANSWER-Global macro and equity long/short are most likely to earn returns from directional market risks. Investor protection clauses are clauses within limited partnership agreement and include - ANSWER-investment strategy, the investment committee, the LP advisory committee, key-person terms, exclusivity, conflicts of interest, and termination Issues facing negatively skewed assets can be addressed by - ANSWER-(1) changing the optimization process to account for skewness and kurtosis; (2) adding constraints for skewness and kurtosis; and (3) limiting the portfolio weights applicable to assets with higher moments The AMC requires that managers should provide at least quarterly performance reporting to clients—and within. - ANSWER-30 days of the end of the period, if possible. This should be done even for funds with lockup periods AIFs are suitable for larger investors with significant funds to invest. AIFs have few restrictions and can invest in a range of securities, including less liquid alternative investments such as hedge funds, private equity, and real estate. SIFs are specialized funds specifically aimed at qualified investors in Luxembourg. - ANSWER-UCITS funds are suitable for smaller investors and typically invest in more liquid and safer investments that are publicly traded. CISs encompass both UCITS funds and AIFs Negative (or exclusionary) screening is an investment approach that avoids including - ANSWER-in investment portfolios the equity or bond securities issued by entities with low environmental, social, and governance (ESG) scores or weak ESG performance Natural resource investments should adopt techniques to reduce the negative impact on biodiversity. That would include achieving sufficient diversity of flora and fauna. - ANSWER-Together with farming and timbering, mining can cause significant disruption and degradation of soil conditions. ESG issues are quite similar between indirect and direct investments in natural resources. Studies on protecting endangered species should be taken before the development process to minimize any negative environmental impacts From 2016 to 2018, ESG assets under management in alternative investments increased nearly - ANSWER-threefold from $206 billion to $588 billion