These are real questions from our Level I question bank, in the same three-option format as the exam. Pick an answer, then check it: every explanation shows why the right answer is right and why each of the other two is wrong.
Sample 1Alternative Investments · Alternative Investment Features, Methods, and Structures · medium
Tanglewood Forest Trust owns 12,000 hectares of mature timberland. A cement producer offers to pay the trust annual fees for ten years in exchange for a promise not to harvest the trees, so that the producer can claim carbon offsets.
If the trust accepts, it most likely:
Sample 2Alternative Investments · Alternative Investment Performance and Returns · medium
Harrowgate Capital Partners, the GP of a private equity fund, is entitled to 20% of aggregate fund profits, subject to a clawback provision. The fund invested USD 15 million in each of three companies. Company X was sold in Year 2 for USD 33 million, and Company Y was sold in Year 3 for USD 21 million; the GP accrued carried interest on each gain at the time of sale. In Year 4, Company Z was sold for only USD 5 million. The amount of previously accrued carried interest the GP must return under the clawback is closest to:
Sample 3Corporate Issuers · Organizational Forms, Corporate Issuer Features, and Ownership · medium
In jurisdictions such as the United States, a private limited company (for example, a limited liability company) differs from a public limited company (corporation) most likely because the private limited company:
Sample 4Corporate Issuers · Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits · medium
Chiara Bellandi is the chief operating officer of Veltrona SpA and owns 0.2% of its shares. She charges the company for a private club membership and uses the corporate jet for family holidays. This conflict with shareholders is best described as:
Sample 5Financial Statement Analysis · Introduction to Financial Statement Analysis · medium
An analyst covering a US-listed software company wants to track, as they occur, purchases and sales of the company's shares by its directors and officers. The SEC filing that is most useful for this purpose is:
Sample 6Financial Statement Analysis · Analysis of Inventories · medium
Delacroix Home Goods reports under US GAAP and uses LIFO. Its cost of goods sold for the year was USD 18,600 million. The LIFO reserve was USD 1,150 million at the beginning of the year and USD 1,420 million at the end of the year.
If Delacroix had used FIFO, its cost of goods sold would have been closest to:
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