Quiz 1

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Everest College *

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FIN3501

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Finance

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Feb 20, 2024

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docx

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Alternative Investments - Quiz 1 Question 1 Marks: 1 When using the net income approach (NOI) in real estate valuation, if inflation is passed through, then the appraisal price will most likely: Choose one answer. a. increase. b. remain unchanged. c. decrease. Question 2 Marks: 1 An analyst collects the following data: Apartment Complex Under Consideration Apartment Complex Recently Sold Office Building Recently Sold Net Operating Income (NOI) $250,000 $91,000 $480,000 Sales price $700,000 $3,000,000
Based on the data provided, the appraisal price of the apartment complex under consideration is closest to: Choose one answer. a. $1,562,500. b. $1,923,077. c. $1,724,138. Question 3 Marks: 1 Hedge funds that contain infrequently traded assets would most likely exhibit a downward bias with respect to: Choose one answer. a. correlations with conventional equity investments but not measured risk. b. measured risk but not correlations with conventional equity investments. c. both measured risk and correlations with conventional equity investments. Question 4 Marks: 1 Venture capital investments used to provide capital for companies initiating commercial manufacturing and sales are most likely to be considered a form of: Choose one answer. a. first-stage financing. b. second-stage financing. c. seed-stage financing. Question 5 Marks: 1 Which classification of hedge funds is least likely to use a short position in stock as a part of its strategy? Choose one answer. a. Market-neutral funds. b. Distressed securities funds. c. Emerging-market funds. Question 6
Marks: 1 The infrequent trading of some assets that hedge funds invest in most likely results in hedge fund: Choose one answer. a. returns being understated. b. correlations with other assets being overstated. c. risk being understated. Question 7 Marks: 1 Which of the following is the least accurate approach used to value closely held companies? Basing the value of company on the: Choose one answer. a. historic cost of the assets of similar companies. b. present value of future economic income. c. average market price of similar companies recently sold. Question 8 Marks: 1 The primary motivation for investing in commodity-linked bonds is that they most likely provide: Choose one answer. a. Protection against interest rate risk. b. Capital gains returns. c. An income stream. Question 9 Marks: 1 An analyst compared the performance of a hedge fund index with the performance of a major stock index over the past eight years. She noted that the hedge fund index (created from a database) had a higher average return, higher standard deviation, and higher Sharpe ratio than the stock index. All the successful funds that have been in the hedge fund database continued to accept new money over the eight-year period. What biases do the risk and return measures in the database most likely have? Average return: Choose one answer. a. is understated and standard deviation is overstated.
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