Chartered Investment Manager (CIM) Practice Exam · Question
Which statement regarding 'committed capital' in private equity funds is correct?
Committed capital is the total amount of capital that limited partners (investors) formally agree to contribute to a private equity fund over its life. This cap
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Question: Which statement regarding 'committed capital' in private equity funds is correct?
Answer options:
- It refers to the capital that has already been invested in portfolio companies. ✅ It is the total amount of capital that investors have agreed to provide to the fund over time.
- It is the capital that the general partner guarantees to return to investors.
- It represents the annual management fees charged by the fund.
Correct answer: It is the total amount of capital that investors have agreed to provide to the fund over time.
Explanation: Committed capital is the total amount of capital that limited partners (investors) formally agree to contribute to a private equity fund over its life. This capital is typically drawn down (called) by the general partner as investment opportunities arise.
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