Consider a $10 million fund with 20% incentive fees and 2% management fees that lasts 5 years, earns a profit of +10%, +6%, +3%, +4%, and a loss of -10% in each of the first five years. What is the percentage of beginning NAV that is earned by the Hedge fund at the end of five years? Show how this percentage varies when the hurdle rate is 0%, 5%, and 10%. Make any necessary assumption as required.

Consider a $10 million fund with 20% incentive fees and 2% management fees that lasts 5 years, earns a profit of +10%, +6%, +3%, +4%, and a loss of -10% in each of the first five years. What is the percentage of beginning NAV that is earned by the Hedge fund at the end of five years? Show how this percentage varies when the hurdle rate is 0%, 5%, and 10%. Make any necessary assumption as required.

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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Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.65%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and has an expense ratio of 0.35%. Assume the rate of return on both funds’ portfolios (before any fees) is 7% per year. Required: How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund How much will an investment of $100 in each fund grow to after 4 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund How much will an investment of $100 in each fund grow to after 11 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund
You are a provider of portfolio insurance and are establishing a four-year program. The portfolio you manage is currently worth $70 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 6.2% per year. Assume that the portfolio pays no dividends. Required: a-1. How much of the portfolio should be sold and placed in bills? (Input the value as a positive value. Do not round intermediate calculations and round your final percentage answer to 2 decimal places.) a-2. How much of the portfolio should be sold and placed in equity? (Input the value as a positive value. Do not round intermediate calculations and round your final percentage answer to 2 decimal places.) b-1. Calculate the put delta and the amount held in bills if the stock portfolio falls by 3% on the first day of trading, before the hedge is in place? (Input the value as a positive value. Do not round intermediate calculations. Round your…
. The investment fund sells class A share with a front –end load of 6% and class B shares with 12b-1 fees of .5% annually as well as back –end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio ( until the fifth year). Assume the portfolio rate of return net of operating expenses is 10% annually. ( LO 4-5) If you plan to sell the fund after four years, are Class A or Class B shares the better choice for you? What if you plan to sell after 15 years?
The value in pounds of a fund at time t = 0 is V0 = 50, 000. After one year (at t = 1) it has increased to V1 = 51, 500 and at that time £1, 500 is withdrawn. After two years (at t = 2) the fund is worth V2 = 50, 800. (a) Compute the time-weighted rate of return. (b) If the fund is liquidated after two years what is the yield that has been achieved?
1. PIMCO Equity Fund has a 3% load. Annual fees are 0.35%, and the expected average annual return for the next 7 years is 11% annually Vanguard Equity Fund is a no-load fund. Its expected average return for the next 7 years is 10% with annual fees of 1.1%. a. If you hold both investments for 2 years, which one is the better investment? b. You believe PIMCO is a better long-term investment. How long must you hold the PIMCO Fund to achieve higher average annual returns than an investment in Vanguard?
QuantAlpha fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.75%. Assume the rate of return on fund portfolio (before any taxes) is 6% per year. How much will an investment of $1000 in the fund grow to after 10 years?
A no-load (commission-free) mutual fund has grown at a rate of 10% compounded annually since its beginning. If it is anticipated that it will continue to grow at this rate, how much must be invested every year so that $120,000 will be accumulated at the end of six years?
You are going to invest in a stock mutual fund with a front-end load of 6 percent and an expense ratio of 1.39 percent. You also can invest in a money market mutual fund with a return of 2.6 percent and an expense ratio of 0.10 percent. If you plan to keep your investment for 2 years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund? What if your investment horizon is 9 years? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 2 Years 9 Years Annual Return % %
A mutual fund with K100 million in assets at the start of the year and with 10 million shares outstanding invests in a portfolio of stocks that provides no income but increases in value by 10 %.Required:(i) What is the rate of return in the fund?
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Loaded-Up Fund charges a 12b-1 fee of 0.75% and maintains an expense ratio of 0.50%. Economy Fund charges a front-end load of 3.0%, but has no 12b-1 fee and has an expense ratio of 0.25%. Assume the rate of return on both funds' portfolios (before any fees) is 10% per year. Required: How much will an investment of $1,000 in each fund grow to after: Note: Do not round your intermediate calculations. Round your answers to 2 decimal places. a. 1 year b. 3 years c. 10 years Loaded-Up Fund Economy Fund

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