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CFA level 2 > Alternative Investments > Flashcards

Alternative Investments Flashcards

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1
Q

What are the basic RE forms and within them?
What are core property RE types?

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2
Q

What are non-core property types?
How can RE be invested in (four types)?

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3
Q

What are the characteristics of RE?

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4
Q

What are the valuation risk factors for RE?

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5
Q

What are the property operation risk factors?

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6
Q

RE cashflow is a function of what?

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7
Q

How do economic factors affect retail, office, industrial, multi-family and Hotel?

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8
Q

What role does RE have in an investment portfolio (what does it offer)?

A

5/ Tax Benefits - depreciation tax shield for direct
investments, elimination of corporate tax for REITs as long as a min. amount of taxable income is paid as a div.

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9
Q

What is the risk/return profile of RE relative to other investment types?

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10
Q

What comes under the classifications of Office, Industrial and Retail?

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11
Q

What comes under classifications of Hospitality and other speciality ?

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12
Q

What are the different lease types?

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13
Q

Investment characteristics of Office and industrial RE?

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14
Q

Investment characteristics of Retail and multi-family?

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15
Q

What are the considerations in DD for private investment?

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16
Q

DD considerations for investing in REIT (public)?

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17
Q

How do appraisal based indexes calculate returns?

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18
Q

What are the two transactions indexes?

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19
Q

Pros and cons of appraisal and transaction indexes?

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20
Q

What are the three valuation approaches for RE investments

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21
Q

Explain what is meant by “highest and best use”?

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22
Q

What is the direct capitalization method and how to interpret what a higher and lower cap rate means? Difference between going-in and terminal cap rate?

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23
Q

Can NOI growth rate not equal the implicit g in the cap rate? What would stabilized NOI include?

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24
Q

Explain the DCF method of RE valuation?

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25
Q

Describe equity and mortgage REITS? Describe REOCs?

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26
Q

What are main CFs fo REOC’s and what do they usually do with CFs? Describe the usual structures of REITS?

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27
Q

What are the pros and cons of REITS?

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28
Q

Describe NAVPS premium and discount and what are the different measurements for RE under IFRS vs GAAP?

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29
Q

How is NAVPS calculated?

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30
Q

NAV reflects value to which type of buyer? What are the issues with NAV

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31
Q

How is FFO and AFFO calculated?

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32
Q

Compare AFFO vs FFO and what are the relative valuation measures?

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33
Q

What are the main drivers of multiples?

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34
Q

Which is the most widely accepted multiple and what are the disadvantages of it?

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35
Q

Summary of pros and cons of private vs public RE investments

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36
Q

What are the different stages in VC and what are the types of buyouts? Who are the investors in PE firms?

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37
Q

What are the valuation techniques used and what are the other considerations?

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38
Q

How can value be created by re-engineering private firms and from greater access to credit markets?

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39
Q

How can value be created from alignment of interests ?

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40
Q

What other methods can be used to align interests?

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41
Q

What is the difference between BO vs VC in terms CF volatility, market position, asset base, management and leverage?

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42
Q

Difference between buyout vs VC in terms of risk measurement, exit, previous trading history , WC needs, due diligence, monitoring by PE firm and variability in returns?

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43
Q

Buyout firms vs VC firms, what type of transactions are BO vs VC and what do each derive most of their revenue from?

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44
Q

What are the 6 characteristics that BO targets usually possess?

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45
Q

What are the three types of buyouts and what is needed in an LBO model/ what inputs go into the PV(Max price)?

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46
Q

What are the potential additional sources of value in a buyout?

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47
Q

Explain the VC method and post and pre money valuation formula ?

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48
Q

Example vc method calc?

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49
Q

Explain VC method when there is existing stock options?

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50
Q

What is stage financing used for and example of calc?

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51
Q

What are the four exit routes for VC?

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52
Q

What are the general PE risk factors?

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53
Q

What are the general PE costs?

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54
Q

What are two main differentiating factors of public vs private equity? What do PE funds need expertise?

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55
Q

Explain the usual timeline of a PE fund?

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56
Q

What are the economic terms

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57
Q

What are the key governance terms?

A

a) key man clause

58
Q

What is the main focus of due diligence?

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59
Q

What are the 6 methods of PE fund valuation?

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60
Q

Explain IRR and the PIC, DPI, RVPI, TVPI multiples and how are they presented?

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61
Q

What is a commodity and which are soft and hard?

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62
Q

How do commodities offer diversification, how to they derive their value and what are the 6 sectors?

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63
Q

Properties of crude oil?

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64
Q

Properties of natural gas?

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65
Q

Properties of refined products?

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66
Q

Properties of the grains and industrial sector

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67
Q

Properties of live stock and precious metals sector

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68
Q

Properties of cash crops

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69
Q

Explain the production cycle for energy

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70
Q

Explain how refineries, pipelines and exploration affect crude S&D? What are the standard contracts for gas, gasoline and natural gas

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71
Q

Explain the production process for industrial/precious metals

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72
Q

Industrial/precious metals production process continued

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73
Q

Explain the production processes for livestock?

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74
Q

Explain the production process for grains

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75
Q

Explain the production process for softs

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76
Q

What are the differences in valuation between commodities and stocks & bonds?

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77
Q

Who are the main participants in commodity markets

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78
Q

What is the difference between spot an futures price, what is the calendar spread, what does backwardation and contango mean

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79
Q

What are the trading strategies under backwardation and contango

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80
Q

What is the insurance (keynes) theory on futures curve shape?

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81
Q

What is the hedging pressure hypothesis

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82
Q

What is the theory of storage?

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83
Q

What are the main components of futures returns

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84
Q

how is roll return calculated?

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85
Q

What is collateral return

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86
Q

How does roll return differ by sector

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87
Q

What is a commodity swap and why may an investor want one

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88
Q

Example of how commodity swap works

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89
Q

What is a total return swap, basis swap, variance swap and volatility swap

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90
Q

What is a commodity index and how do they differ based on breadth of coverage, relative weighting, rolling methodology, rebalancing of weights

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91
Q

How do index differ on governance, what two things should the index be,

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92
Q

Describe the S&P GSCI and BCOM indexes?

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93
Q

Describe the Deutsche Bank Liquid, TR/CC CRB and RICI indexes and what are their rebalancing frequencies

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94
Q
A

CFA level 2 (11 decks)

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