Alternative Investments

CFA Level I — Exam Weight: 5-8%

3

Modules

14

Concepts

5

Formulas

7

Quiz Questions

Modules in Alternative Investments

3 learning modules covering 5-8% of the CFA Level I exam.

1

Alternative Investment Features, Methods, and Structures

5 concepts 3 formulas 3 questions
2

Private Capital: Equity and Debt

4 concepts 2 questions
3

Real Estate, Infrastructure, and Hedge Funds

5 concepts 2 formulas 2 questions

Key Formulas

5 essential formulas for Alternative Investments.

Cap Rate

Cap Rate = NOI / Property Value

Real estate income yield

Property Value

Value = NOI / Cap Rate

Income approach to RE valuation

Management Fee

Fee = Rate × AUM (or Committed Capital)

Typically 1-2% annually

Performance Fee

Incentive Rate × max(0, Return - Hurdle)

Typically 20% above hurdle

Net Return to LP

Net = Gross - Mgmt Fee - Perf Fee

What investor actually earns

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