Caia Level 1

Caia Level 1 Questions

Caia Level 1 Questions


D. Z.
This flashcard set covers advanced finance topics at an expert level, focusing on risk management, investment strategies, and portfolio optimization. It delves into concepts like risk parity, alpha and beta management, and various investment structures, including hedge funds and collateralized debt obligations (CDOs). The flashcards explore methods for performance testing, due diligence processes, and the intricacies of credit derivatives. Ideal for finance professionals and investors, this set provides a comprehensive understanding of sophisticated financial instruments and strategies to enhance investment decision-making and portfolio performance.
Karten
253
Lernende
7
Sprache
Englisch
Kategorie
Finanzen
Stufe
Andere
Erstellt / Aktualisiert
10.02.2016 / 13.06.2022

Lernkarten

Chapter 2 - What are the 7 Buy -Side Institutions?

- plan sponsor - foundation - endowment - family office - sovereign / non -federal funds - alternative investments funds - seperately managed accounts SMAs

Chapter 2 - What are the 2 Sell -Side Institutions?

- dealer banks - retail brokers

Chapter 2 - What are the 8 Outside Service Providers?

- Prime broker - Auditors/accountants - Attorneys - Fund administrators - Hedge fund infrastructure - Consultants - Depositories/custodians - Commercial banks

Chapter 2 - What is the difference between call markets and continuous markets?

In call markets, the stock is only traded at specific times. In continiuous markets, trades occur at any time the market is open

Chapter 2 - A subset of the OTC market where nonmember investment firms, such as institutions and brokers/dealers, can make markets in and trade exchange -listed securities wothout going through the exchange refers to?

the third market

Chapter 2 - the electronic exchange of securities between investors without using services of a broaker as an intermediary refers to what market?

fourth market

Chapter 2 - What forms of regulations have been proposed to help alleviate the risk of alternative investments?

- marketing and distribution regulations - establishment regulations - operational regulations - management regulations

Chapter 2 - What are the 2 criteria which hedge funds has to meet in order to be exempt from the securities act of 1933?

(1) securities must be sold only to US accredited investors (2) seburities must not be marketed to the public

Chapter 2 - What are the 2 criteria which hedge funds has to meet in order to be exempt from the investment company act of 1940?

Section 3(c)(1) hedge funds has 100 or fewer investors in the fund Section 3(c)(7) hedge fund has fewer than 500 super -accredited investors in the fund

Chapter 2 - What states the "Regulation T margin rule"?

that only 50% of the value of a security can be purchased on margin

Chapter 10 - how does real estate development differ from a stand -alone real estate property?

In the development, a real estate is improve / created and real estate development is significantly associated with uncertainty

Chapter 10 - What are the stages of the real estate development process?

1. Acquiring land 2. Forecasting revenues / costs 3. Deisgning the building 4. Approving through government 5. Raising capital 6. Building 7. Leasing

Chapter 10 - What is the most common method used for appraising projects?

DCF

Chapter 10 - What factors are required to appraise a real estate development project?

- market conditions - demand for space - competing developments - overall supply - quality of the building - time

Chapter 10 - How is net operating profit for the DCF calculated?

potential gross inccome - vacancy losses (vacancy loss rate x petential gross income) = effective gross income - operating expenses (fixed and variable expenses) = NOI

Chapter 10 - To what refers the net sales proceed used in a DCF valuation in corporate finance terminology?

Terminal Value

Chapter 10 - How are discount rate and Cash Flows in the pretax approach compared to the aftertax approach?

both higher

Chapter 10 - According to capital theory cash flow should be considered? (pre or after -tax)?

after -tax

Chapter 10 - What are the 6 risk factors accociated with real estate investments?

- Financial risk - Business risk - Operational risk - Liquidity risk - Inflation risk - Legal risk

Chapter 10 - Private equity real estate funds?.

invest pooled investor capital in private real estate

Chapter 10 - Advantages and disadvantages of private equity real estate funds

+ access to private real estate + access to specialized knowledge - no direct control - illiquid - performance difficult to measure

Chapter 10 - Commingled real estate funds (CREFs)?

are a specific type of private quity real estate funds

Chapter 10 - Advantages and disadvantages of CREFs

+ access to private real estate + access to specialized knowhow - no direct control - illiquid - significant capital requirements

Chapter 10 - Explain Limited Partnerships (GPs and LPs)

General Partners manage the funds Limited Partners provide the capital

Chapter 10 - Advantages and disadvantages of Limited Partnerships

+ limited liability + ability mroe aggressive investment style + access to specialized knowhow + possibility of special cash distribution to partners - returns vary greatly - Illiquidity - requier significant capital

Chapter 10 - Open -end real estate mutual funds?

sell shares to stockholders to raise capital and invest this capital in real estate

Chapter 10 - Advantages and disadvantages of Open -end real estate mutual funds

+ access to real estate investments + enter and exit at will + liquidity + regulated by SEC - right to defer investor share redemption - net asset value may trail true market values - commissions, fees, transaction costs - tax inefficient

Chapter 10 - Exchange Taded Funds (ETFs)?

are tradable investment securities that track a particular index

Chapter 10 - Advantages and disadvantages of ETFs

+ low costs + tax efficient + liquidity + ability to take short positions + dividend payments

Chapter 10 - Closed -end real estate mutual funds?

are exchange traded mutual funds with a fixed number of shares outstanding

Chapter 10 - Advantages and disadvantages of Closed -end real estate mutual funds

+ liquidity + can be purchased with margin + long and short positions + transparency + regulated by SEC - tax inefficient - difficult access to specific sectors - discount to NAV

Chapter 10 - How much equity claims must an equity REIT hold at least?

0,75

Chapter 10 - An Real Estate Investment Trust (REIT)?

pools investor capital and makes direct investments in real estate

Chapter 10 - Advantages and disadvantages of REITs

+ potential inflation hedge + no corporate taxation + liquidity + may be margined + quick asset allocation + professional management + corporate governance

Chapter 10 - State the 4 principles of depreciation

1. when depreciation is not allowed for tax reasons the after -tax IRR is less than the pre -tax IRR. Effective tax rate is higher than the stated rate 2. when depreciation for tax reasons equals economic depreciation, then the effective tax rate is equal to the stated tax rate 3. when depreciation for tax reasons is higher (accelerated) then the effective tax rate is less than the stated tax rate 4. when outlays are fully expensed for tax reasons, then after -tax return equals pre -tax return

Chapter 11 - In which structures differ hedge funds from traditional investments?

- trading structure - compensation structure - regulatory structure

Chapter 11 - What are a hedge funds favourable investment attributes?

- Low correlation with traditional investments - long and short positions - potential for larger returns

Chapter 11 - What are the 5 hedge fund classifications based on strategies?

- Futures Funds - Event -Driven Hedge Funds - Relative Value (Arbitrage) Hedge Funds - Equity Hedge Funds - Funds of Funds

Chapter 11 - The high water mark (HWM)?

is the highest NAV that incentive Fees were based on

Chapter 11 - when manager invest a portion of their own money in the fund it is called?

managerial co -investing

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