CFA Level 1 Alternative Investments Study Guide
Master hedge funds, private equity, real estate, and commodities with 162+ practice questions and detailed explanations.
Alternative Investments Topic Breakdown
Key Alternative Investments Concepts
Master these fundamental concepts that appear regularly on the CFA Level 1 exam
Hedge Fund Strategies
HighLong/short equity, global macro, event-driven strategies
Private Equity Structures
HighVenture capital, buyouts, and fund structures
NAV Calculations
MediumNet asset value for private equity and hedge funds
Fee Structures
MediumManagement fees, carried interest, and hurdle rates
How to Ace CFA Level 1 Alternative Investments
Understand Hedge Fund Basics
Know the difference between hedge funds and mutual funds. Focus on strategies, fee structures (2/20), and performance measurement (Sharpe ratio, Sortino ratio).
Master Private Equity Structures
Understand venture capital vs buyout distinctions, fund structures (LP/GP), and the capital call schedule. Private equity has unique cash flow patterns.
Learn Fee Calculations
Carried interest, management fees, hurdle rates, and high-water marks are formula-heavy. Practice calculating hedge fund returns after fees.
Real Estate Valuation
Cap rates and net operating income (NOI) are key. Understand direct capitalization vs DCF approaches for real estate valuation.
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Alternative Investments FAQs
How much of the CFA Level 1 exam is Alternative Investments?
Alternative Investments represents 7-10% of the CFA Level 1 exam, translating to approximately 13-18 questions out of 180 total questions.
What hedge fund strategies should I know?
Focus on long/short equity, global macro, event-driven (merger arbitrage), and relative value strategies. Know the characteristics and risk/return profiles of each.
What is the hardest part of Alternative Investments?
Most candidates find hedge fund performance measurement (hurdle rates, high-water marks) and private equity fee structures challenging.