Alternative Investments

Question 1

What AI’s, their characteristics and what do they offer?

Answer 1

Question 2

What are the categories of AI’s

Answer 2

Question 3

What are the pros/cons of fund investing, co-investing and direct investing?

Answer 3

Question 4

Describe the difference in due-diligence depending on the type of investment and the difference between LP and GP

Answer 4

Question 5

Describe compensation methods for fund?

Answer 5

Question 6

Describe the catch up clause, high water mark

Answer 6

Question 7

Describe the difference between EU and US waterfall payment structure

Answer 7

EU deal is assessed as whole fund and LP’s get paid back when the wholefund makes 200, whereas on the deal by deal they only get money back after clawbacks

Question 8

Charactheristics of hedge funds

Answer 8

Question 9

Explain funds of funds HF’s and the usual fees

Answer 9

Question 10

Describe the equity hedge strategy and the different types

Answer 10

d) Short-biased: short overvalued equity with no or
some long exposure ( index ETFs)
e) Sector-Specific: manager expertise in a particular sector

Question 11

Explain the event driven HF strategy and the types

Answer 11

Question 12

Explain the relative value HF strategy

Answer 12

Question 13

Explain the macro and CTA strategy

Answer 13

Question 14

What is private equity and what are LBO’s

Answer 14

Question 15

Describe the stages in funding for VC

Answer 15

Venture Capital - investments in private companies with high growth potential
- typically start-ups or young companies
- active involvement in portfolio companies

Question 16

What is growth equity and what is a trade sale exit

Answer 16

Question 17

Describe the exit strategies of IPO, recapitalisation, secondary sale and write off/liquidiation

Answer 17

Question 18

What are the types of private debt

Answer 18

Question 19

Explain the risk/return profile of PE and Debt types

Answer 19

Question 20

Explain how different types of private debt/equity differ by growth or value orientation

Answer 20

Question 21

What are the different types of natural resources

Answer 21

Question 22

Characteristics of commodities

Answer 22

Question 23

Characteristics of timber/farmland

Answer 23

Question 24

What are the risk/return profile for commodities and timber/farmland

Answer 24

Question 25

What are the diversification benefits and investment instruments for commodities and timber/farmland

Answer 25

Question 26

Explain the charactheristics of real estate and the basic forms of RE investment

Answer 26

Question 27

Explain direct and indirect RE investing and mortgages?

Answer 27

Question 28

What are the RE private investment styles

Answer 28

Question 29

What are REITS and what do they offer

Answer 29

Question 30

What are the characteristics of residential property, commercial real estate and REIT's

Answer 30

Question 31

What are the risk/return characteristics of RE indexes, private RE investment and repeat sales indexes.

Answer 31

Risks ➞ interest rate risk economic conditions ( leasing, rates) operating risk ( costs) financial risk ( leverage, securing debt)

Question 32

What are the diversification benefits of RE

Answer 32

Diversification/ ~ 50% of returns (private core, listed real estate) derived from income ~ moderate correlations with equities and bonds question remains ➞ does public RE overstate volatility or does private RE understate volatility

Question 33

Explain infrastructure investments and the investment characteristics

Answer 33

Question 34

Describe the types of infrastructure investments

Answer 34

Question 35

Greenfield versus brownfield infra investment

Answer 35

Question 36

Forms of infra investment and its diversification benefits

Answer 36

Question 37

Risk/return profile of high, medium and low risk infra

Answer 37

Question 38

Issues in performance appraisal: Sharpe, treynor , sortino

Answer 38

Question 39

what is the calmar, MAR ratios and J-curve

Answer 39

Question 40

Describe the multiple method, quartile ranking , RE cap rate and capital loss ratio

Answer 40

Question 41

Performance measures for hedge funds

Answer 41

Question 42

Explain redemptions in hedge funds, lock-up and notice periods

Answer 42

Question 43

Explain the different types of custom fee arrangements for hedge funds

Answer 43