Reading 37: Alternative Investments Portfolio Management- called, likely, company, private, investing

wzaina

 

LOS u: Discuss the sources of distressed securities and explain the major strategies for investing in them.

Q1. In distressed securities investing, a private equity fund that seeks to partner with the company in which the fund invests would most likely be called:

A)   a high yield fund.

B)   an orphan equity fund.

C)   a vulture fund.

 

Q2. In distressed securities investing, the strategy that focuses on trying to find opportunities where the prospects will improve is called:

A)   a momentum strategy. The goal is to find a firm that has “improvement momentum.”

B)   long-only value investing. Its returns depend on the fact that the market for distressed securities is efficient.

C)   long-only value investing. Its returns depend on the fact that not all investors can invest in distressed securities.

 

Q3. In alternative investments, distressed debt arbitrage seeks to earn a return from:

A)   an improvement in the prospects of the firm only.

B)   the decline of the stock to zero only.

C)   either the decline of the stock to zero or an improvement in the prospects of the firm.

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