Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Which of the following term LPs prefer?
- Committed capital as carry basis.
- Investment capital as carry basis
- Higher GVM
Expert Solution
Introduction,
LPs (Limited Partners) typically prefer committed capital as carry basis. Carry, or carried interest, is a share of profits paid to the general partner (GP) of a private equity fund. It represents the share of profits that exceed the hurdle rate, which is the minimum rate of return that the fund needs to earn before the GP is entitled to carry.
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