CFA Level I

Question #1 of 7 Question ID: 1210992

Survivorship bias in reported hedge fund index returns will most likely result in index:

A) returns and risk that are biased upward.

B) returns and risk that are biased downward.

C) risk that is biased downward and returns that are biased upward.

Question #2 of 7 Question ID: 1210993

A hedge fund with a 2 and 20 fee structure has a hard hurdle rate of 5%. If the incentive fee and management fee are calculated
independently and the management fee is based on beginning-of-period asset values, an investor's net return over a period
during which the gross value of the fund has increased 22% is closest to:

A) 16.4%.
B) 16.6%.

C) 17.0%.

Question #3 of 7 Question ID: 1210994

The least appropriate measure of risk for alternative investments is:

A) value at risk (VaR).

B) the Sortino ratio.

C) variance of returns.

Question #4 of 7 Question ID: 1210990

The type of real estate index that most likely exhibits sample selection bias is:
 A) REIT index.
B) appraisal index.
C) repeat sales index.

Question #5 of 7 Question ID: 1210991

With respect to mezzanine-stage financing in venture capital investing and mezzanine financing of a leveraged buyout:

A) mezzanine-stage financing refers to a type of security but mezzanine financing does

not.
B) mezzanine financing refers to a type of security but mezzanine-stage financing does
not.
C) both terms refer to financing by issuance of securities that have both debt and equity
characteristics.

Question #6 of 7 Question ID: 1210995

A hedge fund that engages primarily in distressed debt investing and merger arbitrage is best described as using:

A) a macro strategy.
B) an event-driven strategy.

C) a relative value strategy.

Question #7 of 7 Question ID: 1210996

The type of investment most often used to gain exposure to commodity prices is a portfolio of:

A) derivative securities.

B) physical commodities.
C) commodity producing companies.