CIMA Alternative Investments 3

Question 1

An investor in a private equity fund is said to be in the 'blind pool' stage when:

Accepted Answer

Capital is committed before specific investments are identified

Answer

Blind pool funds collect investor capital commitments before the manager has identified the specific investments to be made.

Question 2

Which metric is most commonly used to evaluate private equity fund performance net of fees?

Accepted Answer

Internal Rate of Return (IRR)

Answer

IRR is the standard performance metric for private equity, capturing the time-weighted cash flows of capital calls and distributions over the fund's life.

Question 3

In the context of managed futures, a trend-following CTA strategy generates returns primarily by:

Accepted Answer

Taking positions aligned with persistent price trends in futures markets

Answer

Trend-following CTAs use systematic models to identify and ride sustained price trends across futures markets in equities, bonds, currencies, and commodities.

Question 4

Which type of real estate investment trust (REIT) directly owns and operates income-producing properties?

Accepted Answer

Equity REIT

Answer

Equity REITs own and manage physical real estate properties, generating income through rents collected from tenants.

Question 5

A CIMA professional discussing liquidity risk with a client regarding hedge funds should note that lock-up periods:

Accepted Answer

Restrict investor redemptions for a specified initial period after investment

Answer

Lock-up periods prevent investors from withdrawing capital for a set time, allowing managers to invest in illiquid strategies without forced selling.

(CIMA) Certified Investment Management Analyst Practice Test

(CIMA) Certified Investment Management Analyst Practice Test

CIMA Alternative Investments 3