CFA Level I · CFA Level I Exam · Alternative Investment Performance and Returns
Compared with traditional investments such as listed equities and government bonds, alternative investments are most likely to be characterized by:
Alternative investments are most likely characterized by lower liquidity and more specialized due diligence. They often hold illiquid assets, are valued infrequently, and use complex structures and fee terms, unlike listed equities and government bonds, which offer daily pricing, transparency and simple structures.
- Adaily pricing and high transparency
- Bnarrow legal structures and low fees
- Clower liquidity and more specialized due diligenceCorrect
Explanation
Alternatives such as private capital, real assets and hedge funds typically trade infrequently, are harder to value, and require specialized due diligence. Daily pricing and high transparency describe listed securities, and alternatives usually carry higher, more complex fees and varied legal structures.
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