CSC Alternative Investments 3

Question 1

Which of the following best describes 'infrastructure' as an alternative asset class?

Accepted Answer

Long-lived physical assets like toll roads, airports, and pipelines that generate stable cash flows

Answer

Infrastructure assets are long-lived, capital-intensive facilities that typically operate under regulatory frameworks and generate predictable, inflation-linked revenue streams.

Question 2

What is 'venture capital' primarily used for?

Accepted Answer

Financing early-stage or growth-stage companies with high return potential

Answer

Venture capital provides equity financing to startups and early-stage companies, accepting high risk in exchange for the potential of significant returns if the company succeeds.

Question 3

The Sharpe ratio is used to evaluate alternative investments by measuring:

Accepted Answer

Excess return earned per unit of total risk (standard deviation)

Answer

The Sharpe ratio divides excess return (above the risk-free rate) by the investment's standard deviation, indicating how much return is generated per unit of risk.

Question 4

A 'lock-up period' in a hedge fund context refers to:

Accepted Answer

A minimum holding period during which investors cannot redeem their capital

Answer

Lock-up periods, typically 1–2 years, allow hedge fund managers to invest in illiquid strategies without being forced to sell assets to meet redemption requests.

Question 5

Which regulatory exemption do most Canadian hedge funds rely on to distribute to investors without a full prospectus?

Accepted Answer

The accredited investor exemption under National Instrument 45-106

Answer

Hedge funds typically use the accredited investor exemption under NI 45-106, allowing distribution to high-net-worth individuals and institutions without a prospectus.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Alternative Investments 3