You have made a $400,000 investment in a hedge fund that has a 2/20 fee structure. The fund has a total of $25 million of assets under management and provides a return of 10% in the first year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year in which they are applicable. How much will you pay in management and performance fees for the year? Multiple Choice $1,000; $10,250 $1,000; $10,700 $8,000; $10,250 $8,000; $6,240 $6,240; $9,000

You have made a $400,000 investment in a hedge fund that has a 2/20 fee structure. The fund has a total of $25 million of assets under management and provides a return of 10% in the first year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year in which they are applicable. How much will you pay in management and performance fees for the year? Multiple Choice $1,000; $10,250 $1,000; $10,700 $8,000; $10,250 $8,000; $6,240 $6,240; $9,000

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter2: Descriptive Statistics

Section: Chapter Questions

Problem 17P: Suppose that you initially invested 10,000 in the Stivers mutual fund and 5,000 in the Trippi mutual...

See similar textbooks

Similar questions

You have made a $400,000 investment in a hedge fund that has a 2/20 fee structure. The fund has a total of $25 million of assets under management and provides a return of 10% in the first year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year in which they are applicable. How much will you pay in management and performance fees for the year? Multiple Choice A)$1,000; $10,250 B)$1,000; $10,700 C)$8,000; $10,250 D)$8,000; $6,240 E)$6,240; $9,000
1. You've invested $1,000 in a mutual fund with a 5% front-end load, an expense ratio of 1% and a back-end load of 5%. Expenses are paid at the end of each year. The fund produces an annual return of 8% before fees. a) What is your annual return after fees if you hold the fund for 3 years? b) What is your annual return after fees if you hold the fund for 30 years?
Suppose that at the beginning of Year 1 you invested $10,000 in the Stivers mutual fund and $5,000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided in the table below. Year Stivers Trippi Mean annual return (to 3 decimals) Which mutual fund performed better? $15,000 $16,100 $17,000 $18,000 Compute the mean annual return for the Stivers mutual fund and for the Trippi mutual fund. Do not round intermediate calculations. Stivers Trippi The Trippi mutual fund V ✔ 7.847 % 9.977 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 % $10,500 $11,900 $12,900 $13,900 Hint(s) $5,700 $6,300 $7,000 $7,600 $8,600 $9,200 $9,900 $10,600 Check
Suppose a hedge fund manager earns 1% per trading day. There are 250 trading days per year. Answer the following questions: a. What will be your annual return on $100 invested in her fund if they allow you to reinvest in their fund the 1% you earn each day? b. What will be your annual return assuming they put all of your daily earnings into a zero-interest- bearing checking account and pays you everything earned at the end of the year? Please answer correctly, and provide the work and a slight explanation alongside, thank you its appreciated
Suppose that at the beginning of Year 1 you invested $10,000 in the Stivers mutual fund and $5,000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided in the table below. Mean annual return (to 3 decimals) % Year Year 1 $10,700 Year 2 $11,900 Year 3 $12,900 Year 4 $13,900 Year 5 $15,000 Year 6 $16,000 Year 7 $17,100 Year 8 $18,100 Compute the mean annual return for the Stivers mutual fund and for the Trippi mutual fund. Do not round intermediate calculations. Stivers Trippi % Stivers Trippi $5,600 $6,400 $7,000 $7,600 $8,600 $9,300 $9,900 $10,700
Suppose that you initially invested $10,000 in the Stivers mutual fund and $5,000 in theTrippi mutual fund. The value of each investment at the end of each subsequent year isprovided in the table:Year Stivers ($) Trippi ($)1 11,000 5,6002 12,000 6,3003 13,000 6,9004 14,000 7,6005 15,000 8,5006 16,000 9,2007 17,000 9,9008 18,000 10,600Which of the two mutual funds performed better over this time period?
Suppose a (very skilled) fund manager earns a safe return of .70% per trading day. There are 252 trading days per year. (a) What will be your annualized holding period return on $100 invested in the fundif the manager allows you to reinvest in her fund the .70% you earn each day? (b) What will be your annualized holding period return assuming the manager putsall of your daily earnings into a zero-interest-bearing checking account and paysyou everything earned at the end of the year?
Suppose you invest $5,000 into a mutual fund that is expected to earn a rate of return of 7%. The amount of money you will have in 10 years is closest to which of the following? The amount you will have in 25Lyears is closest to which of the following? O 1) $53,500; $802,500 O 2) $2,552.56; $3,257.79 O 3) $9,835.76; $27,137.16 O 4) $3,138; $ 1,311,892 5) None of the answers are correct
8.) Suppose that a hedge fund begins the year with $10,000,000,000 ($10 billion) in assets under management (AUM). The hedge fund then earns a 25% annual return and ends the year with $12,500,000. The hedge fund's manager is compensated with 'two and twenty.' The manager's management fee is 2% of end-of-year AUM. The managers incentive fee (carried interest) is 20% of all profits in excess of a 15% hurdle rate. a.) How much in dollars is the fund manager paid from management fees? b.) How much in dollars is the fund manager paid from the incentive fee (carried interest)? c.) What is the fund manager's total compensation in dollars for the year?
At the start of the year, you invest $2,000 in fund A. To invest in fund A, you have to pay 4% of your initial wealth as commissions (called front-end loads). During the year, the fund NAV increases from $4 to $4.4. If the expense ratio amounts to 2% per year, what is the annual growth rate of your wealth? 5.6% 10.0% 8.0% 6.6%
An investor is considering two mutual funds. Fund A has a 5.75 percent front-end load and a 1.25 percent expense ratio. Fund B is no-load but has a 2.25 percent expense ratio. If the investor plans on being in either fund for six years, which should they choose given that they have $16,000 to invest and both funds have gross returns of 12 percent per year? Fees are applied at each year-end to year-end asset values, but the load is taken out up front only once.
You have $5,000 to invest You are comparing two investment funds. Fund A returns 4%/yr compounded monthly Fund B returns 4.05% compounded quarterly. Which should you choose and why?