You invest $100,000 in a hedge fund with a 2/20fee structure. For the next 3 years, the hedge fundearns annual returns of 27.08%, -14.07%, and72.79%. You make no withdrawals from the fund.Whenever fees are due, you write a check for thatamount to the fund (such that the fund doesn'tdeduct the fees from your portfolio value). Thefund's fee structure has a high watermark feature.What are the total fees you pay over the course ofthe three years? Enter a number with two decimalpoints. Answer the question in dollar amount, i.e.,if the answer is $20, enter 20.00.

A hedge fund is a type of investment fund that pools money from multiple investors and employs…

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What are the total fees you pay over the course of the three years? Enter a number with two decimal

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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Concept explainers

Balance of Payments

BOP is categorized into the following three components:

Question

You invest $100,000 in a hedge fund with a 2/20
fee structure. For the next 3 years, the hedge fund
earns annual returns of 27.08%, -14.07%, and
72.79%. You make no withdrawals from the fund.
Whenever fees are due, you write a check for that
amount to the fund (such that the fund doesn't
deduct the fees from your portfolio value). The
fund's fee structure has a high watermark feature.
What are the total fees you pay over the course of
the three years? Enter a number with two decimal
points. Answer the question in dollar amount, i.e.,
if the answer is $20, enter 20.00.

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