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so you think you know a lot about private Equity eh well we're gonna test your knowledge today we have three questions for you on limited partnership agreements so let's get started question number one in a limited partnership agreement in private equity which of the following is most likely to be the general partner a private Equity Fund B pension fund C private Equity Firm or D endowment the answer is C private Equity Firm in a limited partnership in private Equity the general partner is the private Equity Firm and the limited partners are the investors such as pensions endowments and Foundations the limited partnership forms the private Equity Fund to learn more about how limited partnership agreements work please check out our video titled how do limited partnership agreements work okay so let's move on to question number two what does elpac stand for in private Equity a limited partner asset Coalition B limited partner asset Council C limited partner advisory committee or D limited partner advisory Council the answer is C limited partner advisory committee in a limited partnership agreement sometimes there are conflicts of interest or material changes to the fund documents that need LP's approval and it would be a logistical nightmare to ask every single LP in a fund so to help with certain decisions a limited partner advisory committee an elpac is formed now the question is how much Authority should the lpac have well we take a deep dive into a sample limited partnership agreement including a discussion about the authority of the Alpac in our video titled ilpa's limited partnership agreement Hall of fund waterfall so please check that out to learn more okay so let's move on to question number three if a private Equity Fund charges 2 and 20. what would be the annual management fee collected by a private Equity Fund if the total committed capital is one billion dollars a 200 million dollars B 220 million dollars see 180 million dollars or D 20 million dollars the answer is D 20 million dollars when a fund charges 2 and 20 that means that the management fee is two percent which most of the time is calculated based on committed capital now the performance fee well that is 20 of the upside now you may see larger private Equity Funds charge less than two percent and you may see smaller private Equity Funds charge more than two percent but a two percent management fee is common in the industry and so that's why the term is two and twenty so to calculate the annual management fee based on two percent figure we have in this question the management fee would be two percent times one billion dollars which equals 20 million dollars now a question that many limited partners ask themselves is I am paying so much in annual management fees why don't I use the money to hire my own team well that's a question that many Canadian pensions ask themselves years ago before the Canadian pension model and private Equity was created did you know that three of the top 10 investors in private equity in the world are Canadian pensions well it's not because Canada is the largest country in the world but because of the Canadian pension model to learn more about this please check out our video titled Canadian pension model private Equity investing those are the three questions we have for you today how'd you do please let us know in the comments and while you're there let us know if you have any recommendations for future questions we'll be posting more Quiz videos to test your PE knowledge so remember to hit that subscribe button foreign [Music]