Caia Level 1
Caia Level 1 Questions
Caia Level 1 Questions
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Cartes-fiches
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
that only 50% of the value of a security can be purchased on margin
In the development, a real estate is improve / created and real estate development is significantly associated with uncertainty
1. Acquiring land 2. Forecasting revenues / costs 3. Deisgning the building 4. Approving through government 5. Raising capital 6. Building 7. Leasing
DCF
- market conditions - demand for space - competing developments - overall supply - quality of the building - time
potential gross inccome - vacancy losses (vacancy loss rate x petential gross income) = effective gross income - operating expenses (fixed and variable expenses) = NOI
Terminal Value
both higher
after -tax
- Financial risk - Business risk - Operational risk - Liquidity risk - Inflation risk - Legal risk
invest pooled investor capital in private real estate
+ access to private real estate + access to specialized knowledge - no direct control - illiquid - performance difficult to measure
are a specific type of private quity real estate funds
+ access to private real estate + access to specialized knowhow - no direct control - illiquid - significant capital requirements
General Partners manage the funds Limited Partners provide the capital
+ 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
sell shares to stockholders to raise capital and invest this capital in real estate
+ 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
are tradable investment securities that track a particular index
+ low costs + tax efficient + liquidity + ability to take short positions + dividend payments
are exchange traded mutual funds with a fixed number of shares outstanding
+ liquidity + can be purchased with margin + long and short positions + transparency + regulated by SEC - tax inefficient - difficult access to specific sectors - discount to NAV
0,75
pools investor capital and makes direct investments in real estate
+ potential inflation hedge + no corporate taxation + liquidity + may be margined + quick asset allocation + professional management + corporate governance
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
- trading structure - compensation structure - regulatory structure
- Low correlation with traditional investments - long and short positions - potential for larger returns
- Futures Funds - Event -Driven Hedge Funds - Relative Value (Arbitrage) Hedge Funds - Equity Hedge Funds - Funds of Funds
is the highest NAV that incentive Fees were based on
managerial co -investing
- Strike price (higher of beginning NAV or HWM) -> negative relationship - Current NAV -> positive relationship - Risk -free interest rate -> positive relationship - Volatility of NAV -> positive relationship - Performance fee percentage -> positive relationship
- increase NAV volatility because volatility is positively related to the value of a call option - increase volatility when the option is far out of the money in an attempt to bring the option back into the money
- own money invested in the fund - poor performance will drive NAV further below HWM - poor performance leads investors to pull capital out of the fund which reduces the management fee - damaging reputation
- FOFs reflect the actual returns of a diversified investor - FOFs are less biased - the net performance of FOFs is net of costs (e.g. for portfolio construction)
- Directional strategies - Event risk strategies - Absolut return strategies - Diversified strategies
- increased return for a given level of risk - lower standard deviation - low correlation of hedge funds with traditional financial assets
when de primary goal is to enhance returns through identification of superior investments
- adding value through specialization (e.g. market segments, sector) - filling gaps of existing portfolios
