medium · Private Credit fund-structures-returns-economics
An investor is analyzing the impact of fund-level leverage on a direct lending fund. The fund has $100M in equity and $100M in debt (1.0× leverage).
If the fund suffers a 2.5% realized loss on its total $200M gross asset base, what is the percentage impact on the fund's equity return?
- 5.0%
- 7.5%
- 2.5%
- 1.25%
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