Exam 17: Alternative Investments

If the five-month futures contract price for gold is currently $1,671.39 per ounce, what should we expect the current spot price to be if the annual interest rate is 3.75%?

What is the estimated value of an income-producing property with an NOI of $65,000 and a cap rate of 11.5%?

Which of the following are investment strategies that may be associated with hedge funds?I. market neutral II. arbitrage III. distressed securities IV. short selling V. market timing

__________ is a term used to indicate that the futures price is higher than the spot price.

If the spot price for palladium is $2,526.40 per ounce, what should the futures contract price be for a three-month contract at an annual interest rate of 3.25%?

A private equity fund has established a 2/20 fee structure. The fund currently has assets under management of $220 million. What is the yearly management fee for this fund?

Which of the following has the effect of being a call option for a specified number of shares in a firm?

Which of the following is an issue arising from the fact that only successful hedge funds are able to report performance results?

You have made a $500,000 investment in a hedge fund that has a 2/20 fee structure. The fund has a total of $25 million of assets under management and provides a return of 15% in the first year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year in which they are applicable. How much will you pay in management and performance fees for the year?

Which of the following is a document that lays out a proposed deal between a private equity fund and a firm selling equity or debt?

__________ is a term that indicates that the futures price is lower than the spot price.

A hedge fund in which a significant proportion of its portfolio is invested in other hedge funds is referred to as which of the following?

Which of the following are the common approaches used to value a real estate asset? I. Real property approach II. Income approach III. Cost approach IV. Real estate investment approach V. Sale comparison approach

Ms. Kline estimates that a commercial building she is thinking of purchasing has gross potential income of $47,000 and a vacancy rate of 7%. She estimates that the operating costs are $25,000 per year and a nearby property with an NOI of $7,500 just sold for $65,000. What is the estimated value of this building?

Mr. Tyson is deciding whether to purchase an investment property that he estimates to have operating costs of $325,000 per year, gross potential income of $500,000, and a vacancy rate of 7.5%. A similar property with an NOI of $122,000 recently sold for $1,000,000. What is the estimated value of this building?

Mr. Dowdy invests $2 million in a hedge fund with a 2/20 fee structure. The fund has a total of $33 million of assets under management and the return in the first year is 23%. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year in which they are applicable. What is the amount of the performance fee that Mr. Dowdy will pay in the first year?

API, Inc., is considering an investment in ETO, Inc. The EBITDA for ETO is currently $6.5 million, and similar deals have recently closed at a 4.5 multiple. The corporate tax rate is 21%. What is the estimated valuation for ETO, Inc.?

A low-rise apartment building in your town has come available for sale and you estimate that it would generate a gross potential income of $350,000 per year and would have operating costs of $300,000 per year. What is the NOI for this property if the vacancy rate is expected to be 12%?

In which of the following steps would a venture capitalist be most likely to evaluate deals using multiples of current cash flows?

For which of the following strategies would a manager concentrate a hedge fund's investments in securities that are being offered at deep discounts?