CIMA Alternative Investments

Question 1

Which characteristic most distinguishes alternative investments from traditional asset classes?

Accepted Answer

Low correlation with public equities and bonds

Answer

Guaranteed principal protection

Answer

Daily liquidity and mark-to-market pricing

Answer

Full SEC registration requirements

Question 2

A CIMA professional is evaluating a hedge fund with a 2-and-20 fee structure. What does '2-and-20' refer to?

Accepted Answer

2% management fee and 20% performance fee

Answer

2% performance fee and 20% management fee

Answer

2% front-end load and 20% redemption fee

Answer

2-year lock-up and 20-day notice period

Question 3

Which type of private equity strategy involves purchasing an entire company, often using significant debt financing?

Accepted Answer

Leveraged buyout (LBO)

Answer

Venture capital

Answer

Growth equity

Answer

Mezzanine financing

Question 4

In the context of hedge fund strategies, a long/short equity fund primarily seeks to profit by:

Accepted Answer

Buying undervalued stocks and shorting overvalued stocks

Answer

Holding only long positions in equity indices

Answer

Investing exclusively in convertible arbitrage

Answer

Using derivatives to replicate fixed income returns

Question 5

A limited partnership structure in private equity limits the liability of limited partners to:

Accepted Answer

Their invested capital only

Answer

The total fund NAV

Answer

All partnership debts and obligations

Answer

Three times their capital commitment

Question 6

Which of the following is a key characteristic of real assets as an alternative investment?

Accepted Answer

They often provide a hedge against inflation

Answer

They have the highest liquidity among alternatives

Answer

They are primarily financial instruments with no physical form

Answer

They are exempt from all capital gains taxes in the US