lol!! how many iterations did you have to run to get that!! very close gaurav …but not quite They’re ABACCB Which of the following statements about oil and natural-gas futures is least accurate? A) “Seasonal trends in oil prices are well documented.” B) “Forward prices for oil tend to be less volatile than prices for natural gas.” C) “Oil prices are similar worldwide, while natural-gas prices differ by region.” Oil prices do not follow seasonal trends, though natural-gas prices do. Both remaining statements are true. -------------------------------------------------------------------------------- Based only on Garland’s three stated investment goals, his best option is: A) oil futures. B) publicly traded real-estate infrastructure equity units. C) a market-neutral hedge fund. Real estate, private equity, and hedge funds can all boost returns, though commodities are more often used as a diversification tool. Real estate and hedge funds offer substantial diversification benefits, but private equity investments tend to move with the stock market. Hedge fund performance is difficult to track, but the changing value of a publicly traded real-estate fund is easy to track. While real estate investments are not the best return generators, they have performed well in recent years, and they are very good for diversification. As such, the real estate equity units represent the best option. -------------------------------------------------------------------------------- In selecting hedge funds for Garland, Cain should avoid: A) emerging-market funds. B) hedged-equity funds. C) merger-arbitrage funds. Most emerging markets do not permit short positions, and Garland only wants hedge funds that take short positions. Both remaining fund strategies generally involve long-short combinations. -------------------------------------------------------------------------------- With regards to measuring the volatility of hedge funds, which of the following is least likely to be a limitation of the Sharpe ratio? A) funds with large private-equity positions will appear less volatile than they actually are. B) it is not effective for selecting good hedge-fund investments. C) its time-dependency makes volatility appear higher over long periods. The Sharpe ratio is time-dependent, but the ratio rises when calculated using longer time periods, suggesting that volatility appears lower, not higher. Both remaining statements reflect limitations of the Sharpe ratio. -------------------------------------------------------------------------------- Based on Garland’s response to the questionnaire, the issue most likely to cause Cain NOT to take him on as a client is: A) suitability. B) tax complexities. C) decision risk. Garland’s responses suggest he is sophisticated and wealthy, quite suitable for alternative-asset investments. His private-equity ownership and complex tax situation are issues Cain must address, but they are not uncommon, and certainly no reason not to take him on as a client. That leaves decision risk. Garland’s answers gave no hint about whether he is loss-averse or likely to make quick and emotional decisions. Since both remaining answers are not reasons for concern, the biggest worry must be the information he did not provide relating to decision risk. -------------------------------------------------------------------------------- Regarding Garland’s plan to purchase grain for his company’s use, Cain should begin by advising him about: A) lease rates. B) convenience yield. C) storage costs. Garland is interested in selling the excess grain, not lending it, so lease rates are not relevant. Storage costs may be an issue, though in some cases the company could have no measurable storage costs. However, the company is likely to know its own costs, and there is probably little reason for Cain to advise Garland on this topic. The convenience yield reflects the value of a commodity held by an investor for nonmonetary return, and affects the price an investor should pay for a commodity.
I did a mistake which i corrected, before your post, believe i was correct…the one with 4 correct was mallozer
I wanted to discuss some of these answers…but I’m going to crash soon… particularly the 1/5/6th parts I guess you guys will get into the nitty gritty…i’ll check this post tomorrow morning… adios!! where’re mwvt/getsetgo/slouiscar/bhaiyyu etc??
Here. I probably already missed you though. I went A A A C C B
OK - Since this was so much fun the first time I’d like to revisit one point. Oil is not a seasonal commodity according to the questions set in this thread. However, in V1 Exam 2 PM session (pg. 113) it says: “This would allow the swap to more effectively hedge a commodity like oil, which would have a higher demand in the winter than the summer” This is a correct statement according to the question set because it does not reference this statement in one of the questions to determine if it is correct/incorrect. This to me implies that oil is a seasonal commodity (even if not explicitly said). Is the distinction perhaps in that ‘seasonality’ is determined by production and not demand? (I.e. Corn seasons) It seems to me that oil would be seasonal based on demand, but I’m willing to ignore that if the CFAI tells me otherwise. I checked the errata and this is not mentioned.
i haven’t looked at answers or more than the first question… but in real world, i’d say natural gas futures are WAY more volatile than oil futures. oil has had a huge swing recently but so has natural gas ($14 to almost as low as $3) and NG has had tons of cycles. don’t oil prices have some seasonality? or because of the easy transport/storage, does it basically not??.. for sure, i’d go with this as my answer. haven’t read the rest of the Q’s… found alternative investments was classic “deer in the headlights” moment when i looked at the EOC questions. figured i could wing it with working knowledge and a couple of readings, but no such luck. surprised me.