You invested $1,100,000 with a market-neutral hedge fund manager. The fee structure is 2/20, and the fund has a high-water mark provision. Suppose the first year the fund manager loses 7 percent and the second year she gains 19 percent. Assume management fees are paid at the beginning of each year and performance fees are taken at the end of each year. What are the management and performance fees paid each year? Note: Leave no cells blank - be certain to enter "O" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places. Management fees Performance fees Year 1 Year 2
You invested $1,100,000 with a market-neutral hedge fund manager. The fee structure is 2/20, and the fund has a high-water mark provision. Suppose the first year the fund manager loses 7 percent and the second year she gains 19 percent. Assume management fees are paid at the beginning of each year and performance fees are taken at the end of each year. What are the management and performance fees paid each year? Note: Leave no cells blank - be certain to enter "O" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places. Management fees Performance fees Year 1 Year 2
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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Bhupatbhai
Transcribed Image Text:You invested $1,100,000 with a market-neutral hedge fund manager. The fee structure is 2/20, and the fund has a high-water mark
provision. Suppose the first year the fund manager loses 7 percent and the second year she gains 19 percent. Assume management
fees are paid at the beginning of each year and performance fees are taken at the end of each year.
What are the management and performance fees paid each year?
Note: Leave no cells blank - be certain to enter "O" wherever required. Do not round intermediate calculations. Round your
answers to 2 decimal places.
Management fees
Performance fees
Year 1
Year 2
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