- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 1. Alternative Investment Features, Methods, and Structures
- Subject 3. Investment and Compensation Structures
CFA Practice Question
Assume a "2 and 20" compensation structure with 8% hurdle rate and a catch-up clause. The partnership has earned a 9% profit. How much can the GP get? A. 1%
B. 1.8%
C. 2%
Correct Answer: B
The LPs get the first 8% (hurdle rate). The GP should receive the entirety of the next 1% profit as the catch-up clause stipulates.
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