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CFA Level I · CFA Level I Exam · Alternative Investment Features, Methods, and Structures

Compared with traditional investments such as listed equities and government bonds, alternative investments are most likely to exhibit which of the following characteristics?

Alternative investments most likely have lower liquidity and less transparent pricing than traditional assets. They often trade privately and infrequently, rely on appraisals or models for valuation, and face varied regulation, unlike listed equities and bonds that have daily exchange prices and standardized disclosure.

  1. ADaily pricing based on exchange trading
  2. BLower liquidity and less transparent pricingCorrect
  3. CStandardized regulation and disclosure worldwide

Explanation

Alternatives such as private equity, real estate and hedge funds typically trade infrequently, are valued by appraisal or models, and face less standardized disclosure. Daily exchange pricing and uniform regulation describe traditional listed assets.

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