CAIA Level 2 Exam Questions And Answers 100% Verified

CAIA Level 2 Exam Questions And Answers 100% Verified Which U.S. regulatory body is responsible for overseeing the derivatives market? - answerThe U.S. Commodity Futures Trading Commission (CFTC) Of the following U.S. federal statutes, which one provides registration and regulation of persons and entities who are engaged in providing advice to others? A.The Securities Act of 1933 B. The Securities Exchange Act of 1934 C. The Investment Advisers Act of 1940 D. The Investment Company Act of 1940 - answerC. The Investment Advisers Act of 1940 For what purpose was the Dodd-Frank Act enacted? - answerThe Dodd-Frank Act was enacted to promote the financial stability of the U.S. by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. In the United States, a firm manages a hedge fund with $50 million in assets under management and operates in a state that does not require the registration of investment advisers. Is national registration still required, and who is the firm's regulator? - answerYes, registration is required, and the regulator is the Securities and Exchange Commission (SEC). What is the difference between an initial public offering (IPO) and an initial coin offering (ICO)? - answerAn initial public offering (IPO) sells shares of a company for the first time, while an initial coin offering (ICO) sells ownership of an asset as tracked through a coin or a digital token. Each European country has its own scheme for regulation and compliance. Therefore, an alternative investment manager must comply with the individual regulatory bodies in each country. Under what circumstance would there be an exception to this rule? - answerIf a manager seeks to conduct business within the European Union, they are subject to a single regulatory scheme, as long as the manager is domiciled in one of its member states. What are the major differences between Undertakings for Collective Investments in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs) in Europe? - answerThese are the following differences: 1. UCITS are generally for retail investors with small investment amounts while AIFs are for investors with higher investments 2. UCITS are restricted to safe and liquid assets while AIFs have fewer investment restrictions 3. UCITS limit leverage while AIFs can use reasonable levels of leverage Name the two methods available to fund managers to engage in the marketing of AIFs by AIFMs - answerThe two methods are as follows: 1. Using a marketing passport available under the AIFMD 2. Marketing in a specific EU member country in accordance with that country's private placement regime What is entailed within asset stripping rules and how long do the rules apply after acquiring control of a non-listed company? - answerAsset stripping rules prevent an AIF from making a controlling private equity investment, having the non-listed company take a loan, and then distributing the loan proceeds themselves. The rules are in effect for two years. Describe the duties of the Securities and Futures Ordinance (SFO) and the Securities and Futures Commission (SFC) in Hong Kong. - answerThe Securities and Futures Ordinance (SFO) is the primary legislation for the regulation of asset management activity in Hong Kong. The Securities and Futures Commission (SFC) is the regulator responsible for overseeing the SFO in Hong Kong. Under which three situations would a fund manager not be required to obtain a capital markets services (CMS) license in Singapore? - answerUnder the following three situations: 1. It carries on fund management in Singapore on behalf of not more than 30 qualified investors, (of which not more than 15 may be funds or limited partnerships). 2. The total value of the assets managed does not exceed a specific amount set out in the regulations. 3. It is registered with the Monetary Authority of Singapore (MAS) as a registered fund management company (RFMC). Describe the role of the Financial Supervisory Service (FSS) in South Korea. - answerThe Financial Supervisory Service (FSS) in South Korea is responsible for inspection of financial institutions as well as enforcement of relevant regulations as directed by the FSC. Describe the level of regulation for marketing of fund interests in Japan. - answerThe marketing of fund interests in Japan is heavily regulated. geopolitical beta - answeradds to the growth and inflation expectations in developing expected returns on various assets 1. What are some of the potential motivations for ESG adoption amongst institutional investors? - answerThe goals and motivations are as follows: A. Increasing risk-adjusted returns B. Reducing reputational risk C. Address stakeholder concerns D. Doing the right thing or improving the planet 2. List some of the challenges faced by institutional investors regarding ESG. - answerThe following are challenges: A. ESG Adoption B. Lack of Standards C. Cost 3. Water conservation, biodiversity, endangered species, and chemical usage are all environmental issues associated with which asset class? - answerNatural Resources 4. For natural resource investors, compliance with health and safety standards for workers, customers, and surrounding communities would most likely fit into which component of ESG: Environmental, Social, or Governance? - answerThis issue would fall under Social considerations.