- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 1. Alternative Investment Features, Methods, and Structures
- Subject 1. Types and Categories of Alternative Investments
CFA Practice Question
The volatility of returns to alternative investments' and correlation of their returns with the returns to traditional investments tend to be:
B. estimated correctly.
C. overestimated.
A. underestimated.
B. estimated correctly.
C. overestimated.
Correct Answer: A
This is because estimated values rather than actual market prices are usually used to be reported to index providers.
User Contributed Comments 6
| User | Comment |
|---|---|
| vatsal92 | Low (underestimated) correlation with traditional investments. |
| GBolt93 | believe it's saying the opposite. Generally correlation is actually higher than expected, hence underestimated. |
| akbhagat96 | Can someone please help me to explain the answer |
| Olesya_CFA | @akbhagat96 look at the second response. It makes sense to me. |
| Logaritmus | Investment in Bitcoin is not risky? Isn't it? |
| allenwang | Is it higher or lower correlation with traditional investments? |