Infrastructure

The exam’s favorite move is to sort assets along two axes at once: greenfield vs. brownfield (construction stage) and economic vs. social infrastructure (asset type). The “tell” is a vignette describing a not-yet-built asset with uncertain demand — that signals greenfield, the higher-risk/higher-return bucket — versus an operating toll road with a regulated tariff, which is brownfield and income-like. A second pattern asks how investors access the asset: direct/private holdings are illiquid with high minimums, while publicly listed infrastructure (or MLPs) add liquidity but pull correlations toward equities.

The classic trap is conflating infrastructure with real estate — both are long-lived physical assets, but infrastructure’s edge is its regulated, low-elasticity cash flows, not rental NOI capitalized at a cap rate. Don’t confuse it with commodities either: infrastructure generates income, whereas commodities produce no cash flow and earn return from spot-price change plus roll yield (and collateral yield). Memory hook: “Green = to be Grown, Brown = already Built.”