- CFA Exams
- CFA Level I Exam
- Study Session 15. Alternative Investments
- Reading 41. Private Equity Valuation
- Subject 4. A note on valuation of venture capital deals
CFA Practice Question
The required ownership for the investor is 60%, the existing number of shares is 1 million. The number of shares the investor requires to achieve her desired ownership fraction is:
B. 666,667.
C. 1,500,000.
A. 600,000.
B. 666,667.
C. 1,500,000.
Correct Answer: C
y/(y + 1000000) = 0.6. y = 1,500,000.
User Contributed Comments 1
| User | Comment |
|---|---|
| JimM | x = total # of shares after investment x = 0.6x + 1,000,000 0.4x = 1,000,000 x = 2,500,000 Therefore, 1,000,000 originally and 1,500,000 new ones |