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Free CFA Alternative Investments Practice Questions & Answers

538 exam-style Alternative Investments questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 1

A commodity is best described as:

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Question 2

Which statement about spot and futures prices is most accurate?

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Question 3

A commodity futures curve is said to be in contango when:

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Question 4

In a long futures position, roll return is typically:

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Question 5

An investor takes a long fully collateralized futures position on a commodity. Over one year: • Spot return: +4% • Roll return: –2% • Collateral (risk-free) return: +3% What is the total return?

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Question 6

The convenience yield in commodity pricing is best described as:

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Question 7

Under the hedging pressure hypothesis, futures prices tend to:

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Question 8

A commodity has: • Spot price: 100 • Near futures price (3 months): 104 What is the basis, and what is the market state? A. Basis = +4; backwardation B. Basis = –4; contango C. Basis = –4; backwardation D. Basis = +4; contango

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Question 9

A long futures investor rolls from a near contract priced at 90 to a far contract priced at 95. Ignoring everything else, the roll return from this roll is:

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Question 10

A key distinguishing feature of direct real estate compared with listed stocks is:

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Question 11

A property generates current net operating income (NOI) of 500,000 per year. The appropriate capitalization rate is 8%. What is the estimated value using direct capitalization?

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Question 12

All else equal, an increase in the required return on real estate (discount rate) will:

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Question 13

A property is valued at 12,000,000 and generates NOI of 900,000. What is the implied capitalization rate?

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Question 14

The sales comparison approach to valuing real estate is most appropriate when:

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Question 15

Which statement best describes illiquidity risk in direct real estate?

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Question 16

A major advantage of investing in a diversified real estate investment trust (REIT) compared with owning a single building directly is:

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Question 17

Funds From Operations (FFO) for a property company is generally intended to:

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Question 18

A listed property company has: • Estimated market value of properties: 1,000 million • Debt at market value: 400 million • Cash: 50 million • Shares outstanding: 50 million What is the estimated NAV per share?

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Question 19

NAV estimates for listed property companies become less reliable when:

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Question 20

A dedicated short-bias hedge fund is most exposed to:

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Question 21

Direct real estate is considered heterogeneous because:

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Question 22

Which of the following is a primary driver of property value?

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Question 23

Net Operating Income (NOI) excludes:

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Question 24

A property with long-term leases to strong tenants typically has:

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Question 25

Which factor most directly increases a property’s market rent potential?

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Question 26

A triple-net lease typically requires the tenant to pay:

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Question 27

Which is a major disadvantage of direct real estate?

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Question 28

A property in a market with oversupply is likely to experience:

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Question 29

Which due diligence step helps identify environmental risks?

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Question 30

A property with short lease terms is more sensitive to:

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Free CFA Alternative Investments Practice Questions & Answers

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Thank you