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Basic Question 0 of 11
A private equity firm has a fee structure of 2 and 20. Five LPs have agreed to provide a total of $100 million to the firm. During the first year of operation, only $30 million is called by the GP for the firm's investment needs due to lack of investment opportunities. There's no investment profit realized during the year. The management fee charged by the GP at the end of year 1 should be:
B. $ 0.6 million.
C. $ 2 million.
A. $0.
B. $ 0.6 million.
C. $ 2 million.
User Contributed Comments 4
| User | Comment |
|---|---|
| ankurwa10 | i disagree with this. Most firms use capital contributions, which is the money i am actually managing. simply because an investor could default on capital call notices etc. I can charge operational expenses etc on commitment (even there the case for using called capital) is strong. |
| ascruggs92 | Answer the question based on what's provided in the notes, not personal experience |
| jfermin315 | lol |
| cfastudypl | well said ascruggs92 as some people may have to have their own AN website and not be here. |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
analyze an industry's structure and external influences using Porter's Five Forces and PESTLE frameworks
CFA® 2025 Level I Curriculum, Volume 3, Module 6.