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Free CFA Alternative Investments Practice Questions & Answers

550 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 151

A FoF has: - Underlying fund average return: 8% - FoF fee drag: 2% FoF net return = ?

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Question 152

A FoF invests: - 40% in Fund A (beta 0.5) - 40% in Fund B (beta 0.7) - 20% in Fund C (beta 1.2) Portfolio beta = ?

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Question 153

A hedge fund with tail‑risk protection is most valuable when:

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Question 154

A hedge fund with high liquidity risk may require:

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Question 155

A hedge fund’s beta to equities determines:

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Question 156

A hedge fund has: - Return: 12% - Beta: 0.3 - Market return: 8% Alpha = ?

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Question 157

A hedge fund has: - Beta = 0.5 - Market drops 10% Expected HF impact = ?

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Question 158

A risk budget allocates:

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Question 159

A fund with high liquidity mismatch risk:

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Question 160

A production-weighted commodity index is most likely to:

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Question 161

A hedge fund has:Annual return: 10%Risk-free rate: 3%Standard deviation of returns: 14% What is its Sharpe ratio?

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Question 162

A hedge fund’s monthly returns (in %) over four months are: +2, –1, +3, –4. Assume the target (threshold) return is 0%. Which months contribute to downside deviation?

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Question 163

High serial correlation in hedge fund returns often suggests:

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Question 164

A key lesson from hedge fund performance in major market crises is that:

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Question 165

A major risk in fixed‑income arbitrage is:

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Question 166

A fund‑of‑hedge‑funds provides:

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Question 167

A volatility arbitrageur sells options implying 20% volatility. Realized volatility = 15%. Volatility spread = ?

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Question 168

A hedge fund earns: - Return: 12% - Risk‑free rate: 2% - Std dev: 20% Sharpe ratio = ?

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Question 169

A fund with low beta but high volatility most likely has:

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Question 170

A fund with hidden equity exposure is most likely to show:

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Question 171

Serial correlation in hedge fund returns often indicates:

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Question 172

A fund with high leverage is most vulnerable to:

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Question 173

A fund’s drawdown measures:

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Question 174

A fund with high downside deviation most likely has:

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Question 175

A fund’s idiosyncratic risk is:

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Question 176

A conditional factor model allows betas to:

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Question 177

A fund with negative exposure to volatility (short vol) is most at risk when:

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Question 178

A fund that shows low volatility but large occasional losses likely has:

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Question 179

A fund with high factor R² likely has:

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Question 180

A fund’s returns have: - Correlation with market: 0.5 - Volatility of fund: 12% - Volatility of market: 20% Beta = ?

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Free CFA Alternative Investments Practice Questions & Answers

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