CIMA Investment Vehicles and Strategies 3

Question 1

Which of the following best describes the J-curve effect in private equity investing?

Accepted Answer

Early negative returns due to fees and capital calls before investments appreciate

Answer

The J-curve reflects negative early returns caused by management fees and unrealized investments, followed by positive returns as companies appreciate and are exited.

Question 2

A variable annuity subaccount differs from a mutual fund primarily because:

Accepted Answer

It is held within an insurance wrapper providing tax deferral

Answer

Variable annuity subaccounts function similarly to mutual funds but are held within an insurance contract, providing tax-deferred growth.

Question 3

In a real estate investment trust (REIT), the 90% distribution requirement refers to:

Accepted Answer

At least 90% of taxable income must be distributed to shareholders to maintain REIT status

Answer

To qualify for pass-through tax treatment, REITs must distribute at least 90% of their taxable income to shareholders.

Question 4

Which of the following is a characteristic of a global macro hedge fund strategy?

Accepted Answer

Uses top-down analysis to take leveraged positions across asset classes and currencies based on macroeconomic views

Answer

Global macro funds use top-down macroeconomic analysis to take directional positions in currencies, bonds, equities, and commodities across global markets.

Question 5

A pension fund allocates 5% to infrastructure investments. Which characteristic makes infrastructure particularly attractive for pension funds?

Accepted Answer

Long-duration, inflation-linked cash flows that match pension liabilities

Answer

Infrastructure assets often generate stable, long-duration cash flows with inflation linkage, making them well-suited to match long-term pension liabilities.

(CIMA) Certified Investment Management Analyst Practice Test

(CIMA) Certified Investment Management Analyst Practice Test

CIMA Investment Vehicles and Strategies 3