What are the key reasons for investing in Real Estate?
Alternative investments, as opposed to traditional investments, have some specific characteristics that make them specially relevant for any investment portfolio. Real estate is a type of alternative investment with a long tradition among investors all over the world. Which of the following sentences better represents the main reasons for investing in Real Estate? a) Diversification
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How can arbitrage opportunities appear when dealing with financial derivatives?
In finance, the market efficiency establishes that market prices should not allow for the possibility of riskless profit or arbitrage in the absence of transaction costs. Which of the following sentences do NOT represent a clear situation of arbitrage with derivatives? a) Two assets with identical future cash flows trade at different prices. b) An
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What is the main difference between committed and uncommitted lines of credit?
Lines of credit are a relevant way of external loan financing for companies. Which of the following sentence better represents the main difference between committed and uncommitted lines of credit? a) Uncommitted lines of credit are more reliable, more flexible, and cheaper than committed lines of credit, and firms can have it as a primary
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What are the different voting processes we can find in equity securities?
A key difference between debt and equity securities is the voting rights that are implicit in equities. Which of the following represents a voting process in which each share represents one vote? a) Proxy voting. b) Statutory voting. c) Cumulative voting. https://vimeo.com/manage/videos/952306523
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What is the main difference between the operating cycle and the net operating cycle?
When dealing with relevant periods in each company, such as the reception of inventory from suppliers, the reception of cash from clients or the payment of cash to suppliers, we define two relevant periods expressed in days, the operating cycle and the net operating cycle, what is the main difference between both cycles? a) The
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What are the main roles of central banks?
According to the CFA Institute, we can determine seven roles accomplished by Central Banks all over the world. Which of this roles is specifically associated to helping to prevent bank runs? a) Monopoly supplier of the currency. b) Banker to the government and other banks. c) Lender of last resort. https://vimeo.com/manage/videos/952328484
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How are expected values and variances calculated in ex-ante scenarios?
Suppose that you have estimated the probability distribution of a hedge fund for next year considering three different scenarios. There is a 40% probability of generating a 30% return (optimistic scenario), a 25% probability of generating a 5% return (flat scenario), and a pessimistic scenario with a negative return of 10%. Calculate with these inputs,
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What is the meaning of the Standard I-A of Professionalism “Knowledge of the Law?
Roberto Velasco, passed the CFA levels I and II in his first attempt, and he recently registered for the Level III exam. Roberto works for a global investment firm known as Alpha Searchers, and his company adopted the Code of Ethics and the Standards of Professional Conduct three years ago. Which one of the following
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How can we reduce risk through diversification in a portfolio basis?
Which of the following performance measures represents the ratio of the standard deviation of an equally weighted portfolio to the standard deviation of a randomly selected security of this portfolio? a) Volatility ratio. b) Diversification ratio. c) Naïve ratio. https://vimeo.com/manage/videos/944899947
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What is the difference between MBOs (management buyouts) and MBIs (management buyins)?
Within private equity strategies, the CFA Institute differentiates among leverage buyouts, venture capital, and growth capital. Leverage buyouts can be segregated into MBOs and MBIs. Which of the following sentences better reflects the main difference between both types of leverage buyouts? a) In MBOs (Management BuyOuts), the current management team is being replaced and the
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