Free CAIA Level I Private Equity Practice Questions
Private equity on CAIA Level I covers venture capital stage financing, growth equity, leveraged buyouts (LBOs), PE fund structures, exit strategies (IPOs, M&A, SPACs), and long-term PE performance benchmarking.
209 questions68 easy99 medium42 hard2026 syllabus
Sample Questions
Question 1
Easy
What is a "vintage year" in private equity?
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Correct Answer: D
Solution
D is correct.
The vintage year refers to the year in which a private equity fund holds its final close or begins deploying capital, and is used to group funds for performance benchmarking purposes.
Question 2
Medium
The power law of returns in venture capital implies that:
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Correct Answer: B
Solution
B is correct.
The power law of returns is a fundamental characteristic of VC investing: a small fraction of portfolio companies (often fewer than 10%) generate the vast majority of fund returns, while many investments result in partial or total losses. This extreme skewness means that missing even one top performer can dramatically reduce fund returns.
Question 3
Hard
Studies of venture capital fund return drivers report which of the following findings?
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Correct Answer: D
Solution
D is correct. Research on GP friendship finds that partners sharing ethnic, educational, or career backgrounds are more likely to share deals, yet this reduces the probability of success, with the harm most pronounced for early-stage investments. The other purported findings reverse the documented relationships for fund size, gender diversity, and connections.
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