Free CAIA Level II Emerging Topics Practice Questions
Practice 44 free Emerging Topics questions for CAIA Level II.
Sample Questions
Question 1
Easy
Which of the following best describes tokenization of alternative assets?
Solution
A is correct. Tokenization creates digital tokens on a distributed ledger that represent fractional ownership or other economic rights in an underlying asset (real estate, private equity stakes, art, infrastructure). The structure enables fractional access, programmable transferability, and potential secondary-market liquidity for traditionally illiquid alternative investments.
Question 2
Medium
An adviser to a US private equity fund is preparing to comply with the SEC's Private Fund Adviser Rules. Which practice most directly addresses the rule's quarterly statement requirement?
Solution
A is correct. The Private Fund Adviser Rules require advisers to deliver quarterly statements that disclose, in a standardized format, fund-level fees and expenses, adviser compensation, and performance metrics. The objective is to give limited partners comparable, timely information across funds and prevent selective disclosure. Standardized periodic LP reporting is precisely the conduct the quarterly-statement rule is designed to enforce.
Question 3
Hard
In the original Takahashi-Alexander (Yale) private-equity cash-flow model, the bow factor is best described as the parameter that:
Solution
D is correct. The bow factor governs the shape of the distribution curve over the fund's life: a higher bow factor delays the bulk of distributions toward later years, while a lower bow factor pulls them forward. Capital calls in Takahashi-Alexander are driven by a separate rate-of-contribution parameter, and discounting and secondary pricing sit entirely outside the model.