CSC CSC - Canadian Securities Course Alternative Investments and Structured Products Questions and Answers

Question 1

Which of the following is a key characteristic that distinguishes hedge funds from traditional mutual funds?

Accepted Answer

Hedge funds can use leverage, short selling, and derivatives to pursue absolute returns

Answer

Hedge funds are only available through banks

Answer

Hedge funds are more regulated than mutual funds

Answer

Hedge funds are required to hold at least 50% in government bonds

Question 2

What is a Real Estate Investment Trust (REIT)?

Accepted Answer

A company that owns, operates, or finances income-producing real estate and distributes most income to unit holders

Answer

A government program that subsidizes first-time home buyers

Answer

A type of mortgage insurance product offered by Canadian banks

Answer

A derivative contract based on real estate price indices

Question 3

What does the term 'lock-up period' refer to in the context of alternative investments?

Accepted Answer

A minimum holding period during which investors cannot redeem their investment

Answer

The period during which a stock is banned from trading due to insider activity

Answer

The time required for a securities regulator to approve a new fund

Answer

A period when hedge fund managers are restricted from trading

Question 4

Which alternative investment strategy involves simultaneously buying and selling related securities to profit from price discrepancies?

Accepted Answer

Arbitrage strategy

Answer

Long-only equity strategy

Answer

Buy-and-hold strategy

Answer

Market timing strategy

Question 5

What is the primary investment objective of a market-neutral hedge fund strategy?

Accepted Answer

To generate returns that are independent of overall market direction by balancing long and short positions

Answer

To maximize returns by concentrating in the highest-momentum stocks

Answer

To replicate the performance of a broad market index at low cost

Answer

To invest exclusively in distressed companies undergoing bankruptcy

Question 6

In the context of alternative investments, what is 'due diligence'?

Accepted Answer

A comprehensive investigation and analysis of an investment opportunity before committing capital

Answer

A legal requirement to disclose fund fees to investors

Answer

The process of rebalancing a portfolio to maintain target allocations

Answer

A regulatory audit performed by IIROC on hedge fund managers