Question

Which of the following best describes the over-commitment strategy by limited partners? a. Minimizing the over-commitment...

Which of the following best describes the over-commitment strategy by limited partners?

a. Minimizing the over-commitment ratio.

b. Mitigating diversification over time

c. It is possible because on average, only a small fraction of limited partners commitments is invested each year

d. Striving for a maximum allocation of commitments per year

Homework Answers

Answer #1

Overcomittment means having more capital committment than capital invested.

Consideration related to funds management is that during the life of a private equity fund, the total cash outflow would not be as high as the initially commited amount, and the timing and size of the cash flows will not be known until the manager actually makes the decision.

Thus, it is possible because on average, only small fraction of the partner's capital is actually invested in a given year. To increase this ratio of investment, they need to overcommit at the beginning. This also reduces opportunity cost.

OPTION C

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Which of the following best describes the trade deficit in Goods (only) of the United...
1. Which of the following best describes the trade deficit in Goods (only) of the United States in December 2018? a) $209.4 Billion b) $59.8 Billion c) $50.3 Billion d) $31.0 Billion 2. With how many countries does the United States currently have Free Trade Agreements? a) 2 b) 15 c) 20 d) 48 3. According to Hufbauer, Cimino, and Moran, in recent years how many U.S. jobs were lost in importcompeting sectors and how many jobs were gained in...
Which of the following best describes the main problem faced by farms in the long run?...
Which of the following best describes the main problem faced by farms in the long run? 1. Lagging technology has decreased the productivity of farmers and therefore resulted in low farm prices and incomes. 2. The highly inelastic nature of agricultural demand has caused small year-to-year fluctuations in farm output to result in highly unstable farm incomes. 3. The supply of farm products has increased relative to the demand for them, and, because demand is inelastic, farm prices and incomes...
Which of the following best describes a project management plan? The project charter, WBS, and project...
Which of the following best describes a project management plan? The project charter, WBS, and project scope statement The schedule, management plans, and budget A formal, approved document used to control the project The project manager's plan for managing and controlling the work The engineering department wants the project objective to be a 10 percent improvement in throughput. The information technology department wants no more than 5 percent of its resources to be used on the project. Management, who is...
Although there is some truth in the following statements, which best describes accepting risk as part...
Although there is some truth in the following statements, which best describes accepting risk as part of a decision-making process, given the definition of risk we have used in this class? Taking a course of action when you are not sure about what will happen in the future. Taking a course of action even though you know that only bad things could possibly happen. Taking a course of action when you are uncertain about the future, but only good outcomes...
What Is Strategy and Why Is It Important? A creative, distinctive strategy that sets a company...
What Is Strategy and Why Is It Important? A creative, distinctive strategy that sets a company apart from rivals and provides a competitive advantage is a company’s reliable ticket to above-average profits. Illustration Capsule 1.1 discusses how Apple’s strategy led to its becoming one of the most profitable companies in the world, with revenues of more than $225 billion. It’s reputation for superior technological innovation and design capabilities has made its products and services the most popular in the world....
Please Check the wrong ones! 1. Which of the following best describes scarce resources? a. Resources...
Please Check the wrong ones! 1. Which of the following best describes scarce resources? a. Resources for which the quantity that people want exceeds the quantity that is freely available b. Resources that most people cannot afford to buy c. Resources for which the quantity demanded is the same for all economic agents d. Resources that can only be distributed efficiently by the government 2. Which of the following statements is true of models? a. It is more important for...
1.Which of the following statements holds true for the term “multicultural respect ethical strategy”? Select one:...
1.Which of the following statements holds true for the term “multicultural respect ethical strategy”? Select one: a. It refers to the charge that people and organizations are forcing ethical codes and attitudes on people with different histories, habits, and customs. b. It refers to accepting that the customs and habits of those conforming to a society should provide guidance for all those entering the society within a culturalist ethics. c. It refers to an internalized inferiority complex which causes people...
In 2010, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larry’s Frozen Yogurt Company, which...
In 2010, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2010 and were estimated at $1.2 million in 2011. Because Jen and Larry were selling premium frozen yogurt containing premium ingredients, each small cup of...
(Bold or colour in your choice) 1)Which one of the following concerning a conservative financing strategy...
(Bold or colour in your choice) 1)Which one of the following concerning a conservative financing strategy is correct?       a. Short-term funds are used to a great extent.       b. . Only non-spontaneous debt financing is used       c. Long-term funds are only used to finance long-term needs.       d. It is a relatively expensive strategy       2) A firm can manage its cash conversion cycle by …       a. accelerating the collection of accounts receivable       b. stretching accounts...
You recently graduated from university, and your job search led you to Coles Group Limited. Since...
You recently graduated from university, and your job search led you to Coles Group Limited. Since you thought the company’s business was very promising, you accepted their job offer. As you are finishing your employment paperwork, Michel, who works in the Finance Department, stops by to inform you about the company’s new superannuation plan. Australian companies offer membership of a superannuation fund to their employees, where their Superannuation Guarantee contributions are saved. Superannuation funds have concessional tax arrangements, which saves...