A hedge fund adopts the 2/20 regime for managers' compensation. It also adopts the T-bill return as benchmark. T-bill returned 5% per year in the past 2 years. The hedge fund had 0% return in first year. What 2nd year's return must it deliver for the manager to realize any incentive fees?
A hedge fund adopts the 2/20 regime for managers' compensation. It also adopts the T-bill return as benchmark. T-bill returned 5% per year in the past 2 years. The hedge fund had 0% return in first year. What 2nd year's return must it deliver for the manager to realize any incentive fees?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A hedge fund adopts the 2/20 regime for managers' compensation. It also adopts the T-bill return as benchmark. T-bill returned 5% per year in the past 2 years. The hedge fund had 0% return in first year. What 2nd year's return must it deliver for the manager to realize any incentive fees?
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