CFA 2026 Level II Vignettes Alternative Asset Analysis Private Equity Free Quiz 3

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CFA 2026 Level II Vignettes Alternative Asset Analysis Private Equity Free Quiz 3

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CFA 2026 Level II Vignettes Alternative Asset Analysis Private Equity Free Quiz 3

Practice CFA 2026 Level II Vignettes Alternative Asset Analysis MCQs from Private Equity. Get instant results with Explanation.

General10 MCQs

1. Vignette 5: Private Equity - Case Study: A private equity fund reports an IRR of 15%. What does the IRR measure and what are its limitations?

A. IRR is the only performance metric for private equityB. IRR is the same as the hurdle rateC. IRR measures the annualized return, considering the timing of cash flowsD. IRR is the return on a single investment, not the fund

2. What is the multiple of invested capital (MOIC)?

A. MOIC = (Distributions + Residual Value) / Invested CapitalB. MOIC = IRR / Invested CapitalC. MOIC = (Invested Capital - Distributions) / Residual ValueD. MOIC = Invested Capital / (Distributions + Residual Value)

3. What is the Public Market Equivalent (PME)?

A. PME compares the fund's IRR to the public market IRRB. PME is the same as MOICC. PME is not used in private equityD. PME compares the fund's cash flows to a public market investment with the same timing

4. What is the J-curve effect in private equity?

A. The J-curve shows a linear increase in returnsB. The J-curve shows a decline in early years, then a sharp increase as investments are realizedC. The J-curve is flatD. The J-curve is the same as the power law

5. What is Total Value to Paid-in (TVPI) in private equity?

A. TVPI = (Distributions + Residual Value) / Committed CapitalB. TVPI = (Distributions + Residual Value) / Invested CapitalC. TVPI = (Distributions + Residual Value) / Paid-in Capital (capital drawn down)D. TVPI = IRR / Paid-in Capital

General10 MCQs

6. Vignette 6: Private Equity - Case Study: An investor is considering a private equity investment. What is the illiquidity risk and how does it affect returns?

A. Private equity investments are liquidB. Private equity investments have no lock-up periodsC. Private equity returns are lower than public marketsD. Private equity investments are illiquid, and investors demand a liquidity premium

7. What is the risk-return profile of private equity investments?

A. Private equity has high risk and high expected returns, with significant illiquidityB. Private equity has low risk and low returnsC. Private equity is risk-freeD. Private equity has the same risk as government bonds

8. What is the role of corporate governance in private equity?

A. Private equity GPs take a passive role in portfolio companiesB. Private equity GPs actively manage portfolio companies and improve governanceC. Private equity GPs do not influence managementD. Private equity GPs only provide capital, not expertise

9. What is key person risk in private equity?

A. Key person risk is not a concern in private equityB. Key person risk is the risk of the portfolio company's management leavingC. Key person risk is the risk that the fund's performance depends on a few key individualsD. Key person risk is the risk of market downturns

10. What is vintage year risk in private equity?

A. All vintage years have the same performanceB. Vintage year is not important for performanceC. Vintage year risk is the risk of the GP leavingD. Vintage year risk is the risk that the fund's performance depends on the year it was raised (market conditions)

📋 CFA - Test Online Practice Quizzes

CFA

Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 135 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Alternative Investments: 8 MCQs
Corporate Issuers: 7 MCQs
Derivatives: 5 MCQs
Economics: 7 MCQs
Equity Investments: 12 MCQs
Ethics: 16 MCQs
Financial Statement Analysis: 11 MCQs
Fixed Income: 11 MCQs
Portfolio Management: 9 MCQs
Quant Methods: 6 MCQs

Merit Formula: -

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