Intro to CAIA

Question 1

What does investment mean?

Answer 1

Any net outlay of cash made with the prospect of receiving future benefits.

Question 2

What are four types of real assets?

Answer 2

Oil, gold, real estate, airports, toll roads, etc.

Question 3

What are the four major types of alternatives?

Answer 3

Real assets, structured products, private equity, hedge funds

Question 4

What are the five types of structures that differentiate traditional and alternative investments?

Answer 4

Institutional, trading, regulatory, securities, and compensation

Question 5

Which structure relates to taxation?

Answer 5

Regulatory

Question 6

What are the four methods of analysis?

Answer 6

Return, compensation, statistical, and valuation

Question 7

What is an incomplete market?

Answer 7

An incomplete market refers to markets with insufficient distinct investment opportunities.

Question 8

What is active management?

Answer 8

Efforts of buying and selling securities in pursuit of superior combinations of risk and return.

Question 9

What is pure arbitrage?

Answer 9

Attempt to earn risk free profits through simultaneous purchase and sale of identical positions trading at different prices in different markets.