Operational Intensive Real Assets

Question 1

Price Elasticity of Demand %(PED)

Answer 1

% Change in Quantity Demanded/% Change in Price

Question 2

Price Elasticity of Supply % (PES)

Answer 2

%Change in Quantity Supplied/ %Change in Price

Question 3

Upstream Operations

Answer 3

Focus on exploration and production

Question 4

Midstream Operations

Answer 4

Focus on storing and transporting the oil and gas

Question 5

Downstream Operations

Answer 5

Focus on refining, distributing, and marketing the oil and gas.

Question 6

Double Taxation

Answer 6

Application of income taxes twice:taxation of profits at the corporate level and taxation of distributions at the individual income tax level.

Question 7

Present Value of Growth Opportunities (PVGO)

Answer 7

High value assigned to an investment based on the idea that the underlying assets offer exceptional future income

Question 8

Investable Infrastructure

Answer 8

1. Public Use
2. Monopolistic Power
3. Government Related
4. Essential
5. Cash Generating
6. Conducive to privatization of control
7. Capital intensive with long-term horizons

Question 9

Greenfield Project

Answer 9

Investable infrastructure can originate as a new, yet-to-be constructed project

Question 10

Brownfield Project

Answer 10

Investable infrastructure can also be an existing project.

History of operations and may have converted from a government asset into something privately investable.

Question 11

Privatization

Answer 11

Governmental entity sells a public asset to a private operator.

Question 12

Public-private partnership (PPP)

Answer 12

Occurs when a private sector party is retained to design, build, operate, or maintain a public building, often for a lease payment for a prespecified period of time.

Question 13

Regulatory risk

Answer 13

Economic Dispersion to an investor from uncertainty regarding governmental regulatory action.

Question 14

Closed-End Funds

Answer 14

Fixed number of shares

Question 15

Open-End Funds

Answer 15

Allow investor to subscribe to and invest further or redeem and make withdrawals on a regular basis

Question 16

Evergreen Funds

Answer 16

Unlisted open-end funds

Question 17

Gates

Answer 17

Are fund restrictions on investor withdrawals

Question 18

Intangible Assets

Answer 18

Economic resources that do not have a physical form.

Question 19

Intellectual Property (IP)

Answer 19

Intangible asset that can be owned, such as copyrighted artwork

Question 20

Excludable Good

Answer 20

Good others can be prevented from enjoying. Exclusivity distinguishes private goods and private property from public goods.

Question 21

Unbundling

Answer 21

IP from corporations and permitting it to be purchased as a stand-alone investment.

Question 22

Negative Costs

Answer 22

Refer not to the sign of values but to the fact that these are costs required to produce what was, in the predigital era, the film’s negative image.

Question 23

Closed End Fund Listed Funds

Answer 23

More liquid than unlisted funds. Less liquid than open-end funds due to prices deviating from NAV.

Question 24

Closed- End Funds Unlisted Funds

Answer 24

Structured like private equity funds
Typical life of 10 to 15 years
1%-2% fees
10-20% carried fees

Question 25

Open-End Funds Listed Funds

Answer 25

More liquid than unlisted funds and closed-end funds.

Greater volatility and correlation with equity markets relative to unlisted funds

Question 26

Open-End Funds Unlisted Funds

Answer 26

Evergreen Funds. More liquid than unlisted closed-end funds.