CFM Investor Relations & Reporting 5

Question 1

Which of the following is typically disclosed in Form ADV Part 2A (the 'brochure') that is most relevant to investor relations?

Accepted Answer

Fees and compensation, conflicts of interest, and disciplinary history

Answer

Form ADV Part 2A is the narrative disclosure document that must describe fees, conflicts of interest, and disciplinary events in plain English.

Question 2

When calculating a fund's Distributions to Paid-In (DPI) ratio, which of the following is used as the numerator?

Accepted Answer

Cumulative cash distributions to LPs

Answer

DPI equals cumulative cash distributions paid to LPs divided by total paid-in capital, measuring actual realized returns.

Question 3

An investor relations professional is reviewing a fund subscription agreement. The 'representations and warranties' section primarily protects the fund by:

Accepted Answer

Confirming the investor is an accredited investor and meets other suitability criteria

Answer

Investor representations and warranties confirm eligibility (accredited/qualified status), legal capacity, and compliance with applicable laws before admitting the investor.

Question 4

A fund manager prepares an Annual General Meeting (AGM) presentation. Which topic is most commonly addressed that is specifically required by best-practice LP governance standards?

Accepted Answer

Portfolio performance, valuation methodology, and any material conflicts of interest

Answer

AGM best practices require covering portfolio performance updates, valuation methods, and disclosure of material conflicts per ILPA and industry norms.

Question 5

A GP is subject to a 'clawback' provision. In which scenario would this provision most likely be triggered?

Accepted Answer

When early profitable exits caused the GP to receive excess carry versus what it would have earned on the fund as a whole

Answer

A clawback requires the GP to return previously distributed carried interest if early realizations resulted in carry payments exceeding what the GP was ultimately entitled to overall.

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM Investor Relations & Reporting 5