CIM CIM Alternative Investments

Question 1

Which characteristic most distinguishes alternative investments from traditional asset classes?

Accepted Answer

Low correlation with public equities and bonds

Answer

Guaranteed principal protection

Answer

Daily liquidity and transparent pricing

Answer

Regulated by the SEC as mutual funds

Question 2

A hedge fund employing a long/short equity strategy aims to profit by:

Accepted Answer

Buying undervalued stocks and short-selling overvalued stocks simultaneously

Answer

Investing only in government bonds

Answer

Tracking a benchmark index with minimal tracking error

Answer

Holding cash equivalents during market volatility

Question 3

Private equity buyout funds primarily create value by:

Accepted Answer

Acquiring companies, improving operations, and selling at a profit

Answer

Trading public equities on margin

Answer

Investing in government-backed mortgage securities

Answer

Providing short-term bridge loans to municipalities

Question 4

The J-curve effect in private equity refers to:

Accepted Answer

Initial negative returns followed by positive returns as investments mature

Answer

Exponential return growth in the fund's early years

Answer

A rapid decline in fund value due to early distributions

Answer

Rising management fees over the fund's life

Question 5

Real assets as an alternative investment class include which of the following?

Accepted Answer

Infrastructure, commodities, and timberland

Answer

Corporate convertible bonds

Answer

Money market instruments

Answer

Exchange-traded index funds

Question 6

Which fee structure is most common among hedge funds?

Accepted Answer

2% management fee, 20% performance fee

Answer

0.5% management fee, no performance fee

Answer

1% management fee, 5% performance fee

Answer

No management fee, 30% performance fee