Hi all,
I’m a bit confused with the practice question for 10 from reading 45.
Question 10.
The answer says “Chau mistakenly believes (assuming the same management skill) the result for Alpha Fund at termination will be on the order of 3 X 0.65 - 1.95 instead of 0.65.”
Why are they multiplying 3 in there?
And just to clarify my answer, her first statement is incorrect because Beta has a higher RVPI (which shows the high return on the remaining fund year). Second statement is wrong because DPI (which shows the distribution over the committed capita) is low compared to Gamma. Does this make sense?