CFA Level I · CFA Level I Exam · Alternative Investment Features, Methods, and Structures
An investor buys a stake in a fund that lends directly to mid-sized companies, bypassing banks, and holds the loans to maturity. This investment is best described as:
The investment is best described as private debt. A fund that lends directly to companies outside banks and public bond markets, holding loans to maturity, is a private capital debt strategy, not a hedge fund trading strategy and not a tangible real asset.
- Aprivate debt.Correct
- Ba hedge fund.
- Ca real asset.
Explanation
Direct lending to companies outside public bond markets and banks is a private debt strategy within private capital. It is not a hedge fund, which uses flexible trading strategies, nor a tangible real asset.
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