medium · Private Credit & Debt fund-structures-returns-economics
A private credit fund uses 1.0x leverage (debt-to-equity) to finance a portfolio of senior loans yielding 10.0%. The fund's cost of borrowing is 6.0%.
If the fund incurs a 1.0% realized loss on its gross assets, what is the resulting return on equity (ROE)?
- 14.0%
- 13.0%
- 12.0%
- 8.0%
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