CFA Investment Foundations Courses 1-
3 Prep Exam
Which is an alternative asset:
a) gold
b) stock
c) Bond - ANS ✔ - a) Gold
An investor seeking to further diversify their portfolio would want to avoid adding investments to
their portfolio with returns that are:
a) uncorrelated with the returns of their portfolio
b) perfectly negativity correlated with the returns of their current portfolio
c) Perfectly correlated with the returns of their portfolio - ANS ✔ - c) Perfectly correlated with the
returns of their portfolio
A contract that gives one party the right, but not the obligation, to buy or sell in the future
a) Option Contract
b) Futures Contract
c) Forward Contract - ANS ✔ - Option Contract
Limited partners in a private equity partnership:
a) have unlimited personal liability for all debts of the partnership
b) are not actively involved in the management of the partnerships investments
c) have limited upside return potential - ANS ✔ - b) are not actively involved in the management of
the partnerships investments
Which of the following is a measure of a bonds expected annualized return:
a) credit spread
b) dividend yield
c) Yield to Maturity - ANS ✔ - c) Yield to Maturity
3 Prep Exam
Which is an alternative asset:
a) gold
b) stock
c) Bond - ANS ✔ - a) Gold
An investor seeking to further diversify their portfolio would want to avoid adding investments to
their portfolio with returns that are:
a) uncorrelated with the returns of their portfolio
b) perfectly negativity correlated with the returns of their current portfolio
c) Perfectly correlated with the returns of their portfolio - ANS ✔ - c) Perfectly correlated with the
returns of their portfolio
A contract that gives one party the right, but not the obligation, to buy or sell in the future
a) Option Contract
b) Futures Contract
c) Forward Contract - ANS ✔ - Option Contract
Limited partners in a private equity partnership:
a) have unlimited personal liability for all debts of the partnership
b) are not actively involved in the management of the partnerships investments
c) have limited upside return potential - ANS ✔ - b) are not actively involved in the management of
the partnerships investments
Which of the following is a measure of a bonds expected annualized return:
a) credit spread
b) dividend yield
c) Yield to Maturity - ANS ✔ - c) Yield to Maturity
