Question

1. Both buyout funds and venture capital funds:
   1. Expect that only a small percentage of investments will pay off.
   2. Play an active role in the management of companies.
   3. Restructure companies to increase cash flow.

2. Hedge funds most likely:
   1. Have stricter reporting requirements than a typical investment firm because of their use of leverage and derivatives.
   2. Hold equal values of long and short securities.
   3. Are not offered for sale to the general publi

3. Which of the following available portfolios most likely most likely falls below the efficient frontier? Portfolio       Expected Return Expected Standard Deviation
   1. A                  7%                 14%
   2. B                  9%                 26%
   3. C                  12%               22%

4. When an investment advisor is developing return and risk objectives for a client:
   1. Return objectives should be absolute and risk objectives should be relative.
   2. Risk objectives should be absolute and return objectives should be relative.
   3. Both return and risk objectives may be stated in absolute or relative terms.

5. For asset allocation purposes, asset classes should be specified such that correlations of returns are relatively:
   1. Low within each asset class and low among asset classes.
   2. High within each asset class and low among asset classes.
   3. Low within each asset class and high among asset classes.

6. Interest rate swaps are:
   1. Highly regulated.
   2. Equivalent to a series of forward contracts.
   3. Contracts to exchange one asset for another.

7. A hedge fund that operates as an activist shareholder is most likely engaging in:
   1. A macro strategy.
   2. A relative value strategy.
   3. An event-driven strategy.

8. Which component of the return on a long futures position is related to differences between spot prices and future prices?
   1. Roll yield.
   2. Price return.
   3. Collateral yield.

9. Greenfield investments in infrastructure are most accurately described as investments in assets:
   1. That are operating profitably.
   2. That have not yet been constructed.
   3. Related to environmental technology.

Answer 1

Answers-

Q ) The correct Option is b. Play an active role in the management of companies.

The Buyout funds are controlled by managemet of company and Venture capital funds provide management expertise to the companies.
The Options a and c are incorrect. Both buyouts and Venture capital funds large percentage of investments to payout and are not involved in restructuring  companies.

Q) The correct Option is c. Are not offered for sale to the general public.

The hedge funds are sold to limited High Net Worth ( HNIs) individuals and are not sold to general public.

The other Options a and b are incorrect. Hedge funds do not have stricter reporting standards and have different values of long and short securities.

Q) The correct Option is b.  Expected return of 9 % and Expected standard deviation of 26 %.

Portfolios that lie below the efficient frontier do not generate enough return for the level of risk. We can infer this because Option c has higher expected return for a lower expected standard deviation or risk but Option b is offering lower expected return for a higher expected standard deviation or risk.  

Q ) The correct Option is c. Both return and risk objectives may be stated in absolute or relative terms.

The risk objectives may be stated on absolute or relative basis using quantitative metrics. The return objectives may be stated on an absolute or relative basis.
The Options a and b are incorrect.  

Note- Kindly put other questions in separate posts