Judah invests $7 million in a hedge fund with a 2/20 fee structure. The fund has a total of $93 million of assets under management and the return in the first year is 22%. 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. What is the amount of the performance fee that Mr. Dowdy will pay in the first year? $276,300

Judah invests $7 million in a hedge fund with a 2/20 fee structure. The fund has a total of $93 million of assets under management and the return in the first year is 22%. 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. What is the amount of the performance fee that Mr. Dowdy will pay in the first year? $276,300

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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