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Alternative Investments in Portfolio Management Quiz

#1

Which of the following is an example of an alternative investment?

Real Estate
Explanation

Diversifying portfolio beyond stocks and bonds.

#2

What is the primary purpose of alternative investments in portfolio management?

Diversification
Explanation

To reduce risk by spreading investments.

#3

Which of the following alternative investments typically has a low correlation with traditional asset classes?

Commodities
Explanation

Offers stability as it moves differently.

#4

What is a characteristic of Private Equity investments?

Direct ownership stakes in companies
Explanation

Directly owning parts of businesses.

#5

What is a characteristic of Real Estate Investment Trusts (REITs)?

Limited liquidity
Explanation

Tradeable but not easily sold.

#6

Which of the following alternative investments is typically associated with the concept of socially responsible investing?

Impact Investing
Explanation

Investing for positive societal outcomes.

#7

Which of the following alternative investments provides direct ownership of physical assets such as precious metals, agricultural products, or energy resources?

Commodities
Explanation

Investing in tangible goods.

#8

Which of the following strategies is often used in Hedge Fund investments?

Leverage
Explanation

Borrowing funds to amplify returns.

#9

What is a common characteristic of Commodities as alternative investments?

Tangible assets
Explanation

Physical goods like gold or oil.

#10

Which of the following is an example of a derivative-based alternative investment?

Futures Contracts
Explanation

Contracts to buy or sell assets.

#11

What is a characteristic of a Distressed Debt investment strategy?

Capitalizing on the financial distress of issuers
Explanation

Profiting from struggling borrowers.

#12

Which of the following is a potential risk associated with investing in Hedge Funds?

Lack of regulatory oversight
Explanation

Minimal supervision by authorities.

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