Sample Questions
Question 1
Easy
Decentralized finance (DeFi) is best described as:
Solution
A is correct.
DeFi encompasses financial applications built on decentralized blockchain networks, using smart contracts to automate services such as lending, borrowing, trading, and insurance without relying on traditional financial intermediaries like banks.
DeFi encompasses financial applications built on decentralized blockchain networks, using smart contracts to automate services such as lending, borrowing, trading, and insurance without relying on traditional financial intermediaries like banks.
Question 2
Medium
Tokenization in the context of digital assets refers to:
Solution
B is correct.
Tokenization is the process of representing real-world or financial assets (real estate, art, securities) as digital tokens on a blockchain. This can enable fractional ownership, 24/7 trading, and potentially greater liquidity for otherwise illiquid assets.
Tokenization is the process of representing real-world or financial assets (real estate, art, securities) as digital tokens on a blockchain. This can enable fractional ownership, 24/7 trading, and potentially greater liquidity for otherwise illiquid assets.
Question 3
Hard
Which of the following best describes a 'side pocket' in a hedge fund?
Solution
B is correct.
A side pocket segregates illiquid, hard-to-value, or distressed assets from the main liquid portfolio. Investors allocated to the side pocket cannot redeem that portion until those assets are sold or otherwise realized, preventing forced sales at depressed prices and treating all investors equitably regardless of redemption timing.
A side pocket segregates illiquid, hard-to-value, or distressed assets from the main liquid portfolio. Investors allocated to the side pocket cannot redeem that portion until those assets are sold or otherwise realized, preventing forced sales at depressed prices and treating all investors equitably regardless of redemption timing.
