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Suppose a hedge fund has a 2 and 20 fee arrangement and a net asset value (NAV) of $250 million at the beginning of the
Suppose a hedge fund has a 2 and 20 fee arrangement and a net asset value (NAV) of $250 million at the beginning of the year. The high water mark was $280 million at the beginning of the year. At the end of the year, fund had a NAV of $278 million, before fees. If management fees are distributed annually based on the start-of-the year NAV, what is the total fees including both management and incentive fees for this year?
a. 5.4 million
b. 5 million
c. 2.4 million
d. 7.6 million
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