Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

How is social infrastructure characterized?

1. Goods and services that can be easily quantified and charged to users.

2. Assets whose users are unable to pay for the services or use them in ways that make usage difficult to quantify.

3. Fixed assets owned by private entities for commercial gain.

4. Systems and networks that ensure financial transactions.

The correct answer is: Assets whose users are unable to pay for the services or use them in ways that make usage difficult to quantify.

Social infrastructure is characterized by assets that provide essential services to the community, particularly those that cater to vulnerable populations who may not have the financial means to pay for such services. This includes facilities like hospitals, schools, and public transportation systems that are crucial for societal well-being. These types of assets often do not have a direct, quantifiable method of charging users, as access is intended to be equitable and supportive of all segments of the population, including those who cannot afford to pay. Hence, social infrastructure plays a vital role in fostering social equity and community development. In contrast, other options describe different types of assets or systems. The first option refers to market-driven goods and services that can be easily measured in terms of usage and payment, which does not align with the concept of social infrastructure. The third option focuses on privately owned assets aimed at profitability, which again diverts from the public service-oriented nature of social infrastructure. Lastly, the fourth choice relates to financial systems rather than the physical or communal services provided by social infrastructure.