Which of the following is also known as an alligator investment? A) Synthetic CDO B) Warehouse Investment C) PAC II of CMO D) Land Investment
I finally know one! (at least I hope so after spending so much time on Monday on this topic) D
D… Taxes eat into investment without cashflows to offset them
what the??? sponge_bob, aimee…where’d you read this?
^^ i knew it had to do something with eating…something/someone
Study session 13, real estate investments. Raw land is speculative and has upkeep/tax costs associated with it (must be “fed”) but no income.
I’m rereading the CFAI text for readings 51-54 (the new alternative investment stuff). The term “alligator investment” showed up in reading 51 (page 567) under vacant/raw land. D is the correct answer (I made up the question). Props to Chad for getting the explanation correct as well. “Alligator Investment” because it has be be “fed”. Just seemed like a great little minutae to ask a question on. This reading is loaded with very testable matrial. What property is good for passive investors, which property is limited because of the low LTV ratio, etc?
wow…i hope they don’t test minutae like that… that’s gonna be a major challenge for anybody…even having read the cfai text…!1
that’s the first time I’m hearing this term … thanks for posting the question!
D for shizzle
is that in the text??.. it’s like they say “never invest in anything that eats”
I would suggest everyone read reading #51-54 out of the CFAI text. There are only a total of like 65 pages (including the title pages, etc) and it isn’t heavy stuff.