Question

43. What determines the economic value of commodities?

A. The claim on a future stream of cash flows

B. The ability to be consumed or transformed over the course of take production cycle

C. Whether the commodities are trading in backwardation or contango

D. The clearinghouse, based on the aggregate valuation of expiring futures contracts

44. Which of the following statements apply more to buyout funds than to venture capital funds?

A. Their valuation risk is high because heroic assumptions are required with traditional valuation models

B. Their source of returns comes primarily from leverage and company building

C. They are invested in rapidly growing sectors or cutting edge technology

D. Their returns’ sensitivity to public markets is high

45. Which of the following describes a top-down approach to constructing a private equity portfolio?

A. An approach that begins with a general economic analysis

B. An approach that is opportunistic and that can lead to an unbalanced portfolio

C. An approach that is simple and robust because it depends on ranking

D. An approach that involves picking the best managers

Answer 1

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B. The ability to be consumed or transformed over the course of take production cycle

The value of commodities is derived from their use in production.

A is incorrect. Commodities do not generate intrinsic cash flows unless transformed

C is incorrect. This refers to commodity futures, not their economic value

D is incorrect. This refers to the settlement mechanism in commodity futures, not their economic value

44]

B. Their source of returns comes primarily from leverage and company building

45]

A. An approach that begins with a general economic analysis