CFA Level I · CFA Level I Exam · Alternative Investment Features, Methods, and Structures
An analyst is classifying a private credit fund that makes direct loans to mid-sized firms, a farmland partnership, and a fund holding bitcoin. Which classification is most appropriate?
The most appropriate classification is private capital, natural resources and digital assets. Direct lending to firms is private debt within private capital, farmland is a natural resource investment, and bitcoin is a digital asset. The other choices mislabel at least two items.
- APrivate capital, natural resources, digital assetsCorrect
- BHedge funds, infrastructure, private capital
- CReal estate, private capital, hedge funds
Explanation
Direct lending is private debt, part of private capital. Farmland is a natural resource (timberland and farmland are real assets in that group). Bitcoin is a digital asset. The other options misclassify at least two of the three.
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