Alternative investments Flashcards
PrivateEquity fund management fee is based on …
committed capital until the committed capital is fully drawn down and invested
Hedge fund management fee is based on …
on invested capital.
capital provided for companies moving toward operation but before commercial manufacturing and sales have occurred (which stage?)
Early-stage financing
A commodity market is in contango when futures prices are
futures prices are higher than the spot price
If the level of broad inflation indices is largely determined by commodity prices, the average real yield on direct commodity investments
equal to zero.
The market approach to valuing portfolio companies in PE firms
multiples
strategy that involves simultaneously holding short and long positions in common stock
quantitative directional.
A PE firm sells a portfolio company to a buyer that is active in the same industry as the portfolio company
trade sale
least attractive for a leveraged buy out
high leverage
The value at risk of an alternative investment
minimum amount of loss expected over a given time period at a given probability level.
Alternative investments are often characterized by
high fees
A PE manager is compensated through
management fee based on committed capital plus an incentive fee
A commodity market is contango
futures price is higher than the spot price
Management buy-in
external management team replaces the existing management team.
Survivorship bias in hedge fund returns contributes
overstatement of performance and understatement of risk
