Question 1
In a leveraged buyout, the sponsor pays an entry enterprise value of $1,000M and incurs $25M of transaction fees. Senior debt of $500M and mezzanine debt of $150M are raised. What sponsor equity check is required to fund the deal?
Correct Answer:
$$375M
Question 2
A buyout fund acquires a company for 10x EBITDA, exits five years later at 12x EBITDA, having grown EBITDA by 50% and paid down half the original debt. Which value-creation lever contributed most to the IRR?
Correct Answer:
All three contribute, with EBITDA growth typically the largest
Question 3
A private equity fund called $50M of capital, returned $120M in distributions, and holds remaining NAV of $30M. What is the fund's TVPI (Total Value to Paid-In)?
Correct Answer:
3.0x
Question 4
An LP invests $10M in a vintage 2020 fund. Over five years, the fund has called $8M and returned $4M. What is the DPI (Distributions to Paid-In)?
Correct Answer:
0.50x
Question 5
Which of the following best describes the J-curve effect in private equity?
Correct Answer:
Reported IRRs are negative in early years due to fees and unrealized investments, turning positive as exits occur
Question 1
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Prepare with the Private Markets Cert Practice Questions - CFA Institute Private Markets & Alternative Investments Certificate Exam practice quiz. This question bank includes 100 questions covering fund, equity, debt, investor, and typically. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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Private Markets Cert Practice Questions - CFA Institute Private Markets & Alternative Investments Certificate Exam

This practice set contains 100 questions from the matching question bank and focuses on fund, equity, debt, investor, and typically. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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