- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 38. Private Equity Investments
- Subject 1. Value creation in private equity
CFA Practice Question
Which statement(s) is (are) true?
II. The higher the agency cost in an investment, the more value a PE firm can add to it.
I. Private equity firms may be able to raise more debt than public companies.
II. The higher the agency cost in an investment, the more value a PE firm can add to it.
Correct Answer: Both are true.
User Contributed Comments 1
| User | Comment |
|---|---|
| vi2009 | for II, the higher the agency cost, the more value a PE firm can add value to the firm by aligning management and investors objectives. |