2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
CAIA Level 1 (2025) comprehensive questions
and verified answers ( detailed & elaborated)
ACTUAL EXAM 2025 TEST!!
Save
Terms in this set (419)
Define investment Investment is deferred consumption
List the four major types Natural resources, commodities, infrastructure, and
of real assets other than intellectual property.
land and other types of
real estate.
List the three major types Hedge funds, Private Equity, and Structured
of alternative investments Products
other than real assets in
the CAIA curriculum.
Name the five structures Regulatory Structures, Securities Structures, Trading
that differentiate Structures, Compensation Structures, and
traditional and alternative Institutional Structures.
investments
Which of the five Regulatory Structures
structures that
differentiate traditional
and alternative
investments relates to the
taxation of an
instrument?
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,2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
Name the four return Diversification, Illiquidity, Inefficiency, and
characteristics that Nonnormality.
differentiate traditional
and alternative
investments.
Name four major Return Computation Methods, Statistical Methods,
methods of analysis that Valuation Methods, Portfolio Management Methods.
distinguish the analysis of
alternative investments
from the analysis of
traditional investments.
An incomplete market refers to the lack of
investment opportunities that causes market
Describe an incomplete
participants to be unable to implement an
market.
investment strategy that satisfies their exact
preferences such as risk preferences.
Active management refers to efforts of buying and
Define active
selling securities in pursuit of superior combinations
management.
of risk and return.
Pure arbitrage is risk free, while arbitrage, as a more
general term is not risk free. Pure arbitrage is an
attempt to earn risk-free profits through the
What distinguishes use of
simultaneous purchase and sale of identical
the term pure arbitrage
positions trading at different prices in different
from the more general
markets. Whereas, arbitrage is used to represent
usage of the term
efforts to earn superior returns even when risk is
arbitrage?
present because the long and short positions are
not identical assets or are not held over the same
time period.
What is the term for a Family office
private management
advisory firm that serves
a group of related and
ultra-high net worth
investors?
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,2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
In a large financial Back office operations
services organization,
what is the name used to
denote the people and
processes that play a
supportive role in the
maintenance of accounts
and information systems
as well as in the
clearance and settlement
of trades?
Are dealer banks Sell-side market participants
described as buy-side or
sell-side market
participants?
1) A fund investor owns shares of a company (the
fund) that in turn owns other investments, whereas
an SMA investor actually owns the invested assets as
the owner on record.
2) A fund invests for the common purposes of
multiple investors, while an SMA may have
List several advantages of objectives tailored to suit the specific needs of the
Separately Managed investor, such as tax efficiency.
Accounts relative to 3) A fund is often opaque to its investors to promote
funds. confidentiality; an SMA offers transparency to its
investors.
4) Fund investors may suffer adverse consequences
from redemptions (withdrawals) and subscriptions
(deposits) by other investors, but an SMA provides
protection from these liquidity issues for its
investors.
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, 2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
Which of the following Arbitrageurs
participants is LEAST
LIKELY to be classified as
an outside service
provider to a fund:
Arbitrageurs,
accountants, auditors, or
attorneys?
List four major legal Private-placement memorandum, partnership
documents necessary for agreement, subscription agreement, management
establishing and company operating agreement
managing a hedge fund?
Systemic risk is the potential for economy-wide
losses attributable to failures or concerns over
What is systemic risk?
potential failures in financial markets, financial
institutions, or major participants.
What is the acronym for UCITS
fund vehicles that are
regulated and allow retail
access of hedge-fund-
like investment pools in
the European Union?
In terms of financial Financial Conduct Authority - the primary regulator
regulation, what is the of financial services in the UK.
FCA?
Progressive taxation places higher percentage
What is progressive
taxation on individuals and corporations with higher
taxation of income?
incomes.
What is the general term Discrete compounding
denoting compound
interest when the interest
is not continuously
compounding?
https://quizlet.com/1008343959/caia-level-1-2025-comprehensive-questions-and-verified-answers-detailed-elaborated-actual-exam-2025-test-fl… 4/110
CAIA Level 1 (2025) comprehensive questions
and verified answers ( detailed & elaborated)
ACTUAL EXAM 2025 TEST!!
Save
Terms in this set (419)
Define investment Investment is deferred consumption
List the four major types Natural resources, commodities, infrastructure, and
of real assets other than intellectual property.
land and other types of
real estate.
List the three major types Hedge funds, Private Equity, and Structured
of alternative investments Products
other than real assets in
the CAIA curriculum.
Name the five structures Regulatory Structures, Securities Structures, Trading
that differentiate Structures, Compensation Structures, and
traditional and alternative Institutional Structures.
investments
Which of the five Regulatory Structures
structures that
differentiate traditional
and alternative
investments relates to the
taxation of an
instrument?
https://quizlet.com/1008343959/caia-level-1-2025-comprehensive-questions-and-verified-answers-detailed-elaborated-actual-exam-2025-test-fl… 1/110
,2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
Name the four return Diversification, Illiquidity, Inefficiency, and
characteristics that Nonnormality.
differentiate traditional
and alternative
investments.
Name four major Return Computation Methods, Statistical Methods,
methods of analysis that Valuation Methods, Portfolio Management Methods.
distinguish the analysis of
alternative investments
from the analysis of
traditional investments.
An incomplete market refers to the lack of
investment opportunities that causes market
Describe an incomplete
participants to be unable to implement an
market.
investment strategy that satisfies their exact
preferences such as risk preferences.
Active management refers to efforts of buying and
Define active
selling securities in pursuit of superior combinations
management.
of risk and return.
Pure arbitrage is risk free, while arbitrage, as a more
general term is not risk free. Pure arbitrage is an
attempt to earn risk-free profits through the
What distinguishes use of
simultaneous purchase and sale of identical
the term pure arbitrage
positions trading at different prices in different
from the more general
markets. Whereas, arbitrage is used to represent
usage of the term
efforts to earn superior returns even when risk is
arbitrage?
present because the long and short positions are
not identical assets or are not held over the same
time period.
What is the term for a Family office
private management
advisory firm that serves
a group of related and
ultra-high net worth
investors?
https://quizlet.com/1008343959/caia-level-1-2025-comprehensive-questions-and-verified-answers-detailed-elaborated-actual-exam-2025-test-fl… 2/110
,2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
In a large financial Back office operations
services organization,
what is the name used to
denote the people and
processes that play a
supportive role in the
maintenance of accounts
and information systems
as well as in the
clearance and settlement
of trades?
Are dealer banks Sell-side market participants
described as buy-side or
sell-side market
participants?
1) A fund investor owns shares of a company (the
fund) that in turn owns other investments, whereas
an SMA investor actually owns the invested assets as
the owner on record.
2) A fund invests for the common purposes of
multiple investors, while an SMA may have
List several advantages of objectives tailored to suit the specific needs of the
Separately Managed investor, such as tax efficiency.
Accounts relative to 3) A fund is often opaque to its investors to promote
funds. confidentiality; an SMA offers transparency to its
investors.
4) Fund investors may suffer adverse consequences
from redemptions (withdrawals) and subscriptions
(deposits) by other investors, but an SMA provides
protection from these liquidity issues for its
investors.
https://quizlet.com/1008343959/caia-level-1-2025-comprehensive-questions-and-verified-answers-detailed-elaborated-actual-exam-2025-test-fl… 3/110
, 2/20/25, 8:44 AM CAIA Level 1 (2025) comprehensive questions and verified answers ( detailed & elaborated) ACTUAL EXAM 2025 TEST!! Flas…
Which of the following Arbitrageurs
participants is LEAST
LIKELY to be classified as
an outside service
provider to a fund:
Arbitrageurs,
accountants, auditors, or
attorneys?
List four major legal Private-placement memorandum, partnership
documents necessary for agreement, subscription agreement, management
establishing and company operating agreement
managing a hedge fund?
Systemic risk is the potential for economy-wide
losses attributable to failures or concerns over
What is systemic risk?
potential failures in financial markets, financial
institutions, or major participants.
What is the acronym for UCITS
fund vehicles that are
regulated and allow retail
access of hedge-fund-
like investment pools in
the European Union?
In terms of financial Financial Conduct Authority - the primary regulator
regulation, what is the of financial services in the UK.
FCA?
Progressive taxation places higher percentage
What is progressive
taxation on individuals and corporations with higher
taxation of income?
incomes.
What is the general term Discrete compounding
denoting compound
interest when the interest
is not continuously
compounding?
https://quizlet.com/1008343959/caia-level-1-2025-comprehensive-questions-and-verified-answers-detailed-elaborated-actual-exam-2025-test-fl… 4/110
