Citadel LLC is one of largest hedge fund firms in the United States. Citadel now holds $360 billion in its hedge fund account. Citadel charges a 2% management fee based on assets under management at year end, and a 20% incentive fee. In its first year, Citadel appreciates 19.20%. Calculate the investor’s net return. Assume that management fees are calculated using end-of-period valuation, the performance fee is calculated net of the management fee, and no hurdle rate on its performance. A. 13.45% B. 17.25% C. 21.25% D. 24.65%

Citadel LLC is one of largest hedge fund firms in the United States. Citadel now holds $360 billion in its hedge fund account. Citadel charges a 2% management fee based on assets under management at year end, and a 20% incentive fee. In its first year, Citadel appreciates 19.20%. Calculate the investor’s net return. Assume that management fees are calculated using end-of-period valuation, the performance fee is calculated net of the management fee, and no hurdle rate on its performance. A. 13.45% B. 17.25% C. 21.25% D. 24.65%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 11MC

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