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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 211

Add a hedge fund: - Weight: 20% - Vol: 8% - Correlation with portfolio: 0.1 Portfolio vol before adding HF: 10% Approximate new volatility contribution from HF = ?

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Question 212

A hedge fund has: - Vol: 12% - Correlation with portfolio: 0.3 - Weight: 25% Marginal contribution to risk ≈ ?

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Question 213

A portfolio has: - Return: 8% - Vol: 10% Add HF with: - Return: 6% - Vol: 5% - Correlation: 0 New portfolio return (50/50) = ?

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Question 214

Same data as Q26. New portfolio volatility = ?

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Question 215

A hedge fund has: - Standalone vol: 20% - Correlation with portfolio: 0.0 - Weight: 10% Contribution to portfolio vol = ?

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Question 216

A hedge fund has: - Return: 10% - Vol: 8% Sharpe ratio (rf = 2%) = ?

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Question 217

A hedge fund reduces portfolio volatility from 12% to 10%. Volatility reduction = ?

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Question 218

Value at Risk (VaR) is best described as:

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Question 219

Conditional VaR (CVaR) measures:

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Question 220

Stress testing is used to:

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Question 221

Scenario analysis differs from stress testing because it:

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Question 222

Tail risk is best described as:

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Question 223

A portfolio with high drawdown sensitivity is likely to:

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Question 224

A portfolio with high correlation across strategies is likely to have:

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Question 225

A fund with high exposure to volatility risk is most affected when:

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Question 226

A risk metric that captures non‑normal return distributions better than VaR is:

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Question 227

A fund with high kurtosis in returns likely experiences:

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Question 228

A fund with high skewness in returns:

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Question 229

A fund that uses derivatives to hedge risk is most likely:

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Question 230

A fund with high exposure to equity beta contributes to portfolio risk by:

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Question 231

A fund with high exposure to volatility-of-volatility risk is most affected when:

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Question 232

A portfolio has a 1‑day 95% VaR of $2 million. Interpretation: There is a 5% chance the portfolio will lose more than:

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Question 233

A portfolio has: - Mean return: 0% - Std dev: 10% 95% VaR (1.65σ) = ?

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Question 234

A portfolio has: - VaR = $5 million - CVaR = $8 million Tail loss beyond VaR = ?

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Question 235

A portfolio has: - Volatility = 12% - Correlation with market = 0.5 - Market vol = 20% Beta = ?

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Question 236

A portfolio has: - Peak value: 150 - Trough value: 120 Drawdown = ?

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Question 237

A fund has: - Std dev: 15% - Downside deviation: 9% Ratio of downside to total volatility = ?

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Question 238

A portfolio has: - 40% in Asset A (vol 10%) - 60% in Asset B (vol 20%) Correlation = 0 Portfolio vol = ?

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Question 239

A fund has: - Return: 8% - Risk‑free rate: 2% - Volatility: 12% Sharpe ratio = ?

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Question 240

A portfolio has: - 95% VaR = 12% - CVaR = 18% What percentage of losses occur beyond VaR?

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Free CFA Alternative Investments Practice Questions & Answers

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Before you go, can we ask you one thing?

Thank you