fund-structures-returns-economics — Private Credit Practice Questions
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- What is the Dividend Coverage ratio?
- If management achieves a 6.0x Money Multiple (MOIC) on their personal investment, while the PE Sponsor achieve
- A BDC (Business Development Company) is required to distribu… — What is the primary benefit of this structure
- What is the fund's TVPI (Total Value to Paid-In) multiple?
- An investor is reviewing a fund's performance and sees a DPI… — What does this suggest about the fund's lifecy
- What is its current Debt-to-Equity (Leverage) ratio?
- If the fund's net TVPI is only 1.15×, what is the most likely explanation?
- A GP is managing a fund with a 'European' (whole-fund) water… — How much carried interest can the GP collect o
- What is the Sponsor's Money Multiple (MOIC)?
- If the BDC maintains a 10% cash buffer and maximizes its new regulatory leverage capacity, what is the maximum
- Which of the following is the most accurate interpretation of this metric for an institutional LP?
- An investor uses the 'Kaplan-Schoar PME' to evaluate a 2018… — If the PME is $1.15, what does this indicate ab
- What percentage of ownership must the investor acquire today to meet their target (assuming no further dilutio
- If the BDC aims to maintain its RIC tax status and has $5 million in realized capital losses, what is the mini
- A direct lending fund reports a 'PIK as % of Total Income' o… — How should an LP likely interpret this metric
- If the company generates $10 million in cash flow and pays a $2 million dividend to the seller during that six
- What is the fund's 'Distributed to Paid-In' (DPI) ratio?
- Assuming the hurdle is non-compounding for simplicity in this example, how much carry does the GP receive?
- If there are no credit losses or incentive fees, what is the net ROE?
- If the portfolio experiences a 2.0% realized loss on gross assets, what is the net return on equity before fee
- If the exit equity value is $500M and the fund achieves a 3.0× MOIC, what is the value of the management's sta
- What is the 'Residual Value' (Unrealized Value) currently held in the portfolio?
- If the fund has $500M in commitments, $400M in total capital drawn, and has realized $120M (at cost) of its in
- What is the 'Envy Ratio'?
- Given an 8% preferred return (compounded annually) resulting in a 93.9M hurdle, and a 20% GP catch-up, how muc
- Under a whole-fund waterfall, what is the total dollar amount of carry received by the GP?
- If the fund has distributed 80M, how much more cash must be distributed for the DPI to reach 1.0x?
- If the gross asset yield is 10.75% and the fund expects annual credit losses of 0.75% on total assets, what is
- An institutional investor uses the Public Market Equivalent (PME) method to benchmark a fund. The investor con
- An LP is conducting due diligence on a direct lending fund.… — What is the most significant risk highlighted b