Private Markets Pathway

CFA® Level III pathway, published weight 30–35%. GP/LP economics, private equity and debt, special situations, real assets.

What the outline covers

Private Investments and Structures
General Partner and Investor Perspectives and the Investment Process
Private Equity
Private Debt
Private Special Situations
Private Real Estate Investments
Infrastructure

Sample questions

These 5 questions are free in the app too. Try each one before opening the answer.

Question 1

A fund has paid-in capital of $100m, distributions of $40m and a remaining net asset value of $90m. TVPI is:

PIC $100m · Distributions $40m · NAV $90m

A. 0.40×
B. 0.90×
C. 1.30×
D. 2.25×

Show the answer

C. DPI = 40/100 = 0.40×, RVPI = 90/100 = 0.90×, so TVPI = 0.40 + 0.90 = 1.30×.

Reading: Private Markets Pathway — General Partner and Investor Perspectives

Question 2

Under a European (whole-fund) waterfall compared with an American (deal-by-deal) waterfall, the general partner receives carried interest:

A. Earlier, with a higher clawback risk
B. Later, with a lower clawback risk
C. Earlier, with a lower clawback risk
D. At the same time under both structures

Show the answer

B. A whole-fund waterfall returns all contributed capital and the preferred return before any carry is paid, which delays carry and reduces clawback risk.

Reading: Private Markets Pathway — General Partner and Investor Perspectives

Question 3

A general partner uses a subscription-line credit facility to delay capital calls. The most direct effect on reported performance is:

A. TVPI rises and IRR is unchanged
B. IRR rises and TVPI is broadly unchanged or slightly lower
C. Both IRR and TVPI rise
D. Both measures fall

Show the answer

B. Delaying the capital call shortens the period capital is outstanding, flattering the money-weighted IRR. Interest cost slightly reduces the multiple.

Reading: Private Markets Pathway — General Partner and Investor Perspectives

Question 4

A covenant-lite loan compared with a traditional maintenance-covenant loan most likely implies:

A. Higher expected recovery for the lender
B. Lower expected recovery, because intervention is delayed
C. No difference in expected recovery
D. Higher recovery but greater default probability

Show the answer

B. Without maintenance covenants the lender cannot force early remediation, so deterioration runs further before workout, reducing recovery.

Reading: Private Markets Pathway — Private Debt

Question 5

A brownfield infrastructure asset with a regulated revenue framework will most likely display:

A. Equity-like returns and high cyclical sensitivity
B. Bond-like returns and low cyclical sensitivity
C. Equity-like returns and low cyclical sensitivity
D. High construction risk

Show the answer

B. Operational assets with regulated or contracted revenue produce stable, long-duration cash flows that behave more like bonds than equities.

Reading: Private Markets Pathway — Infrastructure

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