CFA Level I · CFA Level I Exam · Alternative Investment Performance and Returns
A venture capital fund has paid-in capital of $50 million, cumulative distributions of $35 million, and a net asset value of $40 million. The fund's TVPI is closest to:
TVPI equals cumulative distributions plus residual value, divided by paid-in capital. Here (35 + 40) / 50 equals 1.50. The figures 0.70 and 0.80 are DPI and RVPI, each capturing only part of the fund's total value to investors.
- A0.70
- B0.80
- C1.50Correct
Explanation
TVPI = (distributions + residual value) / paid-in capital = (35 + 40) / 50 = 1.50. DPI is 35 / 50 = 0.70 and RVPI is 40 / 50 = 0.80. Each of those omits one component of total value, so neither is TVPI.
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