1. Preferred return (preferred return), also called threshold rate of return (hurdlerate), is actually a different expression of a concept. Hurdlerate: refers to the guaranteed return to LPs. This is variable, usually 8%-12%.

Wait, a very good investment company can only give LPs a very low guaranteed return because it always makes money for others.

2. When the actual rate of return of PE is lower than this ratio, LP has the right to obtain all the income, and GP has no right to withdraw performance commission. That is, the premise for GP to obtain performance commission is that PE obtains and realizes investment income that exceeds the priority income.

3. LP’s priority income must be obtained before other income.

Once the PE's rate of return exceeds the threshold rate of return, the GP is like crossing a threshold and can be rewarded based on merit and allocate performance commissions.

In practice, some LPAs only stipulate a specific ratio of return on investment and do not directly use the names of priority return or threshold return, but in fact they play the same role.

As for the specific proportion, it ranges from 6% to 20% or even higher, depending on the fund.

Yield refers to the rate of return on investment, generally expressed as an annual percentage, and is calculated based on the current market price, face value, coupon rate and time to maturity.

For a company, the rate of return is net profit as a percentage of average capital employed.

The rate of return studies the rate of return as an individual (and family) and social (government public expenditure) investment rate of return. It can be divided into personal rate of return and social rate of return, with the main focus being on the former.

The investor invests principal C in the market, and after time T, its market value becomes V. Then in this investment: 1. The income is: P=V-C2, and the rate of return is: K=P/C=(V-C)/

C=V/C-13. The annualized rate of return is: (1) Y= (1+K)^N-1= (1+K)^ (D/T)-1 or (2) Y= (V

/C)^N-1=(V/C)^(D/T)-1 where N=D/T represents the number of times the investor repeats investments within a year.

D represents the effective investment time of one year, D=360 days for bank deposits, bills, bonds, etc., D=250 days for stocks, futures and other markets, D=365 days for real estate and industry, etc.

There are four factors that determine the rate of return in a market economy: (1) The productivity of capital goods, that is, the expected rate of return on coal mines, dams, roads, bridges, factories, machines and inventories.

(2) The degree of uncertainty in the productivity of capital goods.

(3) People’s time preference, that is, people’s preference for immediate consumption and future consumption.

(4) Risk aversion, that is, what people are willing to give up to reduce risk exposure.