CFA Practice Question

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CFA Practice Question

Alternative investments are usually characterized by:

I. High use of leverage.
II. High fees.
III. High liquidity of underlying investments.
Correct Answer: I and II

Low liquidity instead.

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.
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