A hedge fund currently has assets of $2 billion The annual fee structure of this fund consists of a fixed fee of 1 percent of portfolio assets plus a 20 percent incentive fee The fund applies the incentive fee to the gross return each year in excess of the portfolio 's previous high water mark, whi...

a Fixed fee 1 of 2 billion 20 million If the return is 29 new value ...

A hedge fund currently has assets of $2 billion. The annual fee structure of this fund consists

Question:

A hedge fund currently has assets of $2 billion. The annual fee structure of this fund consists of a fixed fee of 1 percent of assets plus a 20 percent incentive fee. The fund applies the incentive fee to the gross return each year in excess of the portfolio's previous high-water mark, which is the maximum value since the inception of the fund. The maximum value the fund has achieved so far since its inception was a little more than a year ago when its value was $2.1 billion. Compute the fee that the manager would earn in dollars if the return on the fund this year turns out to be
a. 29%
b. 4.5%
c. -1.8%
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...