Alternative Investments Flashcards
What values does asset-based approach use?
Either the liquidation value or fair market values of assets.
Explain discounted cash flow approach.
Calculate the present value of expected future cash flows.
Describe the comparables-based approach.
It uses market or private transaction values of similar companies to estimate multiples of EBITDA, net income, or revenue.
What is a secondary sale?
A private equity firm sells one of its portfolio companies to a group of investors or another private equity firm.
What is the notice period?
It is the time within which a hedge fund must fulfill a request for redemption of shares.
What is the lockup period?
The period during which investors may not redeem shares.
What is the characteristics of valuations based on appraisals?
It tends to smooth returns compared to market-based valuations. Tends to have lower standard deviation.
