Most funds will have some hurdle rate that the limited partners will get before the general partners take their cut off the top. The hurdle rate usually is clustered around 8-10%, but can be higher or lower. It is also sometimes referred to as the preferred rate.

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The Hurdle Rate Is

Question 22

Multiple Choice

The hurdle rate is:

A) the rate of money expenditure in a new venture.
B) the rate charged to the most credit-worthy investors.
C) the rate paid to the investors before the general partners' cut.
D) the rate of interest charged on the borrowing firm by the venture capitalists.

Correct Answer: