CIM CIM Alternative Investments 3

Question 1

Commodity investments can serve as an inflation hedge primarily because:

Accepted Answer

Their prices tend to rise with general price levels since they are inputs to goods and services

Answer

Commodity prices are directly tied to the cost of raw materials, so they naturally tend to increase when inflation rises.

Question 2

A CIM candidate is analyzing a REIT. Which feature is a defining characteristic of publicly traded REITs?

Accepted Answer

They must distribute at least 90% of taxable income to shareholders as dividends

Answer

To maintain their tax-advantaged REIT status, companies must distribute at least 90% of taxable income to shareholders annually.

Question 3

When assessing a client's suitability for alternative investments, which factor is most critical?

Accepted Answer

The client's liquidity needs, risk tolerance, and investment horizon

Answer

Alternatives often involve lock-up periods and higher risk, so a thorough assessment of the client's liquidity needs, risk profile, and time horizon is essential.

Question 4

Managed futures funds typically use which type of trading approach?

Accepted Answer

Systematic trend-following strategies across multiple futures markets

Answer

Most managed futures programs use systematic, rules-based trend-following strategies applied across commodity, currency, equity, and interest rate futures.

Question 5

The concept of 'dry powder' in private equity refers to:

Accepted Answer

Uninvested committed capital available for future investments

Answer

Dry powder represents committed but not yet deployed capital that a private equity fund has available to make new investments.

CIM - Chartered Investment Manager Practice Test

CIM - Chartered Investment Manager Practice Test

CIM CIM Alternative Investments 3