easy · Private Credit fund-structures-returns-economics
Which of the following describes the 'J-Curve Effect' in a private equity fund?
- The rapid acceleration of realized gains once a portfolio company reaches full operating maturity
- The tendency for GPs to mark down asset values in year one before any operational improvement is visible
- The upward drift in leverage multiples as a company's credit rating gradually improves over the hold
- Initial negative returns due to management fees and investment costs before exits are realized
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