CAIA level 1 - Topic 2 Introduction to alts Exam Questions with Correct Answers

4 types of alternative assets - Answer-Alternatives are defined by inclusion: Real Assets Hedge Funds Private Equity Structured products Real Assets - Answer-Direct ownership of non financial assets: - natural resources - commodities - real estate - land - infrastructure - IP (intellectual property) 5 Structures of Alternatives - Answer-TRICS: - trading - marked by high skill & complex strategy (hedge fund) - regulatory - marked by lower government regulation and taxation ( - institutional - private & non-retail markets - compensation - performance based fee & incentive structure - securities - unlike traditional equity & debt cash flow structure Structures of Real assets - Answer-Institutional Securities Regulatory Compensation Hedge Funds - Answer-Privately organized investment vehicles with little regulation - involved shorting, leverage or derivatives - includes managed future Private equity - Answer-Equity and debt positions which are not publicly traded - venture capital - LBOs - mezzanine debt - distressed debt Structured Products - Answer-Instruments created to exhibit particularly return, risk, taxation, or other attribute - include CDOs and credit derivatives Return characteristics of alternatives - Answer-NIDI