CAIA Alternative Investment Vehicles Flashcards
6 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAIA Alternative Investment Vehicles flashcards as text
What is a Special Purpose Vehicle (SPV) primarily used for in alternative investments?
Answer: To isolate assets and liabilities for a specific transaction or investment
An SPV is a legal entity created to isolate financial risk by holding specific assets or liabilities separate from a parent company.
Which structure is most commonly used by US-domiciled hedge funds to accommodate tax-exempt domestic investors?
Answer: Limited partnership onshore feeder
Tax-exempt US investors (e.g., pension funds) typically invest through an onshore limited partnership feeder to avoid UBTI issues.
A Business Development Company (BDC) is required to invest at least what percentage of its assets in qualifying assets?
Answer: 70%
Under the Investment Company Act of 1940, BDCs must invest at least 70% of total assets in qualifying assets, primarily private or small public companies.
Which of the following best describes a Interval Fund structure?
Answer: A fund that offers periodic but limited liquidity windows rather than daily redemptions
Interval funds provide liquidity only at set intervals (e.g., quarterly), making them suitable for holding less liquid alternative assets.
In a fund-of-funds structure, the primary benefit to investors is:
Answer: Diversification across multiple underlying managers
Fund-of-funds provide access to multiple managers and strategies, reducing manager-specific risk through diversification.
A Real Estate Investment Trust (REIT) must distribute at least what percentage of taxable income to maintain its tax-advantaged status?
Answer: 90%
REITs must distribute at least 90% of their taxable income annually to shareholders to qualify for pass-through tax treatment.