Alternative Investment Performance and Returns: practice question

Correct answer: A

Working: RVPI = TVPI − DPI = 1.25 − 0.75 = 0.50; unrealized value = 0.50 × $400.0m = $200.0m (check: total value 1.25 × 400 = 500 less distributions 0.75 × 400 = 300)

Explanation: A is correct: TVPI is the sum of DPI and RVPI, so the unrealized residual is 1.25 − 0.75 = 0.50 of paid-in capital, or 0.50 × $400.0 million = $200.0 million; equivalently, total value of 1.25 × 400 = $500.0 million less cumulative distributions of 0.75 × 400 = $300.0 million. B is incorrect because $300.0 million is 0.75 × paid-in capital — the cash already distributed to investors — so it swaps the realized component for the residual one. C is incorrect because $500.0 million is the fund's total value at a TVPI of 1.25 and still includes the $300.0 million that has already been paid out.