You work for a Hedge Fund trading Mortgage Bonds, and you charge your clients on a traditional 2/20 fee structure.

With the recent increase of interest rates, and given your short positions, you have been able to realize nice returns.

What would be the approximate total fee (payable to you) that a client with $100 million (in January 1^st) will owe you, if at the end of this year his investment is worth $130 million (before fees are deducted)

a. $130M x 2% = $2,600,00

b. $30M x 20% = $6,000,000

c. ($30M $2.6M) x 20% = $5,480,000

d. $2,600,000 + $5,480,000 = $8,080,000