Investment Jobs Alternative Investments Test 2

Question 1

What is a 'fund of funds' in the context of alternative investments?

Accepted Answer

An investment vehicle that allocates capital across multiple underlying hedge funds or PE funds

Answer

A mutual fund that invests only in index funds

Answer

A pension fund that invests across asset classes

Answer

A government fund that supports private equity investment

Question 2

What is the 'J-curve effect' in private equity investing?

Accepted Answer

Negative returns in early years give way to positive returns as investments mature and are exited

Answer

Returns are highest in the early years of a fund

Answer

Fund performance mirrors the economic cycle

Answer

Leverage amplifies both gains and losses symmetrically

Question 3

Commodities are included in investment portfolios primarily for which benefit?

Accepted Answer

Inflation hedging and low correlation with stocks and bonds

Answer

High dividend income

Answer

Predictable cash flows

Answer

Tax efficiency

Question 4

What is a 'lock-up period' in the context of hedge fund investing?

Accepted Answer

A period during which investors cannot redeem their investment from the fund

Answer

The minimum holding period required by the IRS for capital gains treatment

Answer

The time needed to complete a leveraged buyout

Answer

A regulatory waiting period before short selling

Question 5

What distinguishes an 'accredited investor' under US securities law?

Accepted Answer

Has annual income exceeding $200K (or $300K joint) or net worth over $1M excluding primary residence

Answer

Holds a FINRA Series 7 license

Answer

Has completed a certified investor education course

Answer

Has a minimum of 10 years investing experience

Question 6

What is 'distressed debt investing'?

Accepted Answer

Purchasing the debt of companies near or in bankruptcy at deep discounts to profit from recovery or restructuring

Answer

Investing in bonds with negative yields

Answer

Lending money to distressed homeowners

Answer

Buying high-yield bonds before a credit downgrade