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Basic Question 3 of 5
Alternative investments are usually characterized by:
II. High fees.
III. High liquidity of underlying investments.
I. High use of leverage.
II. High fees.
III. High liquidity of underlying investments.
User Contributed Comments 2
| User | Comment |
|---|---|
| ankurwa10 | Don't know how accurate I am on this but since alt investment managers seek better than market returns, and leverage is used to magnify returns (of course magnifies losses too :P) so, leverage is usually a feature of alternative investments. |
| ascruggs92 | Yes, but one can do that without an AI vehicle (they can just open a margin account with a broker). I got that wrong, but now that I'm thinking about it, almost all the examples they gave in the notes are characterized by high leverage (i.e. Real Estate, Private Equity, Hedge Funds), so I guess from that standpoint II makes sense. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe features and categories of alternative investments
CFA® 2025 Level I Curriculum, Volume 5, Module 1.