Alternative Investments

Why are "country" funds organized as closed-end funds?

Because it is often difficult to liquidate the foreign securities to get their value into the U.S.

Investment Real Estate:

-Active rather than passive role -Not correlated with stock market -Potential inflation hedge -High level increases risk and possible reward

Commodities:

-Generally not correlated with stock market -Potential inflation hedge -Agricultural very popular -Precious metals - largest spreads (gold, platinum, silver)

Limited partners in a DPP have: General partners have:

-Limited liability Unlimited liability

A hedge fund is usually organized as:

A partnership, which is the issuer of the securities, with management investing alongside the investors

All of the following are common to both DPPs and REITs EXCEPT: A) pass-through of losses. B) capital gains distributions. C) centralized management. D) pass-through of income.

A) pass-through of losses.

In general, the most common form of organization chosen by hedge funds is A) a business development company B) an LLC C) an S corporation D) a limited partnership

D) a limited partnership

An investment adviser who is discussing forward contracts with a client would most likely be referring to an investment in A) an equity index annuity B) an agricultural commodity C) a diversified portfolio D) puts and calls

D) puts and calls

An agent must obtain written verification of an investor's net worth for which investment?

Direct participation programs.

In a limited partnership program, the limited partner's loss is limited to...

Their bases, which includes their initial contribution and funds committed for but not yet contributed

One way for an accredited investor with an aggressive stance to reduce the overall risk in his portfolio is by

purchasing a hedge fund *Although the T-bills and the CDs will reduce the overall risk, they are not the best answer because the question is dealing with an aggressive investor.

A hedge fund and a traditional mutual fund are similar in that:

their portfolio managers are likely to effectuate trades on a daily basis.