Question 4. After graduating from the MFin program, you get a job working for the Drew University Endowment. The CIO has recently decided to include private equity (PE) in the endowment's asset allocation model. It's been sometime since the endowment has invested in private equity and the CIO knows you are a recent MFin graduate, so are you asked the following questions: a) What are the benefits of private equity? What are the drawbacks? (2pts) Table 1: Cash Flow for Birdbrain Investor Fund Quarter Paid In Distributed b) How should the investment committee think about returns and risk? (2pts) c) What are the stages of private equity and why is it important for your investment committee to understand these? (2pts) d) What are the issues with modeling PE in Mean Variance Optimization (MVO) and how can they be overcome? (2pt) NAV 1Q 2018 $ 2Q 2018 $ 3Q 2018 $ 505,155 $ 1,270,825 $ 385,073 $ $ 29,027 $ 309,178 1,406,673 39,969 $ 1,605,300 4Q 2018 $ 1Q 2019 $ 2Q 2019 3Q 2019 $ 4Q 2019 $ 1Q 2020 $ 2Q 2020 $ 3Q 2020 $ 4Q 2020 $ 1Q 2021 $ 2Q 2021 $ 3Q 2021 $ 4Q 2021 $ 1Q 2022 $ 2Q 2022 $ 3Q 2022 $ $ 2,362,691 $ 298,494 $ 2,247,000 $ 4,015,998 $ 561,560 $ 3,703,025 $ 974,099 $ 6,070,209 $ 7,564,596 $ 1,421,637 $ 2,157,836 $ 963,183 $ 2,189,741 $ 2,232,604 $ 1,588,099 $ 2,858,854 $ $ 4,155,121 527,695 $ 3,965,555 24 $ 58,807 $ 231,382 $ 6,114,569 10,157,944 10,521,423 9,378 $ 164,270 $ 573,512 $ 22,731,568 2,832,167 $ 28,774,156 357,378 $ 30,695,057 1,870,527 $ 1,718,705 $ 744,525 $ 14,193,547 15,908,681 33,871,888 34,283,883 39,156,217 2,854,338 $ 43,967,370 1,675,120 $ 41,891,466 1,131,383 $ 44,383,165 4Q 2022 $ 288,908 $ 1,548,897 $ 44,214,799 1Q 2023 $ 1,883,236 $ 105,614 $ 41,826,061 2Q 2023 $ 1,202,427 $ 1,191,705 $ 42,259,572 3Q 2023 $ 4Q 2023 $ 878,233 $ 171,005 $ $ 361,108 $ 44,267,652 4,411,039 $ 45,808,473 5,469,949 $ 42,551,129 Impressed with your answers, your CIO asks you to review The Birdbrain Investor Fund, a 2018 vintage fund that investors commited $50MM to. The statement of cash flows for this investment is highlighted in Table 1. Your CIO would like an analysis of this fund as Birdbrain is about to launch a second Fund. Use these data to answer the following questions: e) How much of investor commitment has been called? How much is remaining? (1pt) 1Q 2024 $ Called Remaining f) What stage of the life cycle does this fund appear to be in for 1020? Explain. (2pt)