Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
10th Edition
ISBN: 9780077835422
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 20, Problem 11PS
A hedge fund with
a.
b.
C.
D.
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Required:
A hedge fund with $1.9 billion of assets charges a management fee of 2% and an incentive fee of 20% of returns over a money
market rate, which currently is 4%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio
returns of: (Enter your answers in millions rounded to 1 decimal place.)
Portfolio
Rate of
Return (%)
a.-2
b.0
G. 4
d. 8
Answer is not complete.
Total Fee
($ million)
38.0
45.6
53.2
Total Foo
(%)
1.7
2.00
2.4
28
Mansukh
Required:
A hedge fund with $1.7 billion of assets charges a management fee of 2% and an incentive fee of 20% of returns over a money market
rate, which currently is 5%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of
(Enter your answers in millions rounded to 1 decimal place.)
Answer is complete but not entirely correct.
Portfolio
Rate of
Return (%)
b.0
c. 5
d. 10
Total Fee
($ million)
34,000,000.0
34,000,000.0
34,000,000.0
51,000,000.0
Total Fee
(%)
2.0
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2.0
2.0
3.0
››
Chapter 20 Solutions
Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 20 - Prob. 1PSCh. 20 - A fund manages a 3.6 billion equity portfolio with...Ch. 20 - Prob. 3PSCh. 20 - Prob. 4PSCh. 20 - Which of the following would be the most...Ch. 20 - Prob. 6PSCh. 20 - Which of the following hedge fund types is most...Ch. 20 - Prob. 8PSCh. 20 - Prob. 9PSCh. 20 - Is statistical arbitrage true arbitrage? Explain....
Ch. 20 - A hedge fund with 1 billion of assets charges a...Ch. 20 - Prob. 12PSCh. 20 - Prob. 13PSCh. 20 - Prob. 14PSCh. 20 - Prob. 15PSCh. 20 - 16. The following is part of the computer output...Ch. 20 - Return to the previous problem. LO202 a. Suppose...Ch. 20 - Prob. 18CCh. 20 - Prob. 19CCh. 20 - Prob. 1WMCh. 20 - Prob. 2WMCh. 20 - Prob. 3WM
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- Assume a hedge fund has a fee structure of 4 plus 25%. What return is the hedge fund required to generate on the managed portfolio (before fees) if it is to provide investors with a return of 15% net of fees?arrow_forward7. Impacts of Costs on Returns. A mutual fund has a 1.69% expense ratio and begins with a $124.655 NAV. It experiences the annual returns shown below. What are the end-of-year NAVs after fees for each year? What are the after-fee returns each year?arrow_forwardAssuming risk free rate to be 2% p.a while market return is expected to be 8% return with a Standard Deviation of 10%, answer the following question using Markowitz Model of lending and borrowing at risk free rate Questions : a) River Park fund aims to earn a 12% Return on their Portfolio comprising of equities tracking the Dow Jones and Risk free Securities. To achieve this goal, how much risk will they have to assume? Show the risk return combination for the fund with the weightsarrow_forward
- The Treasury bill rate is 6% and the market risk premium is 7%. Which of the capital investments shown above have positive (non-zero) NPV's? Project Beta Internal Rate of Return, % P 1.00 14 Q 0.00 10 R 2.00 20 S 0.40 11 T 1.70 22arrow_forward4. Suppose you are a money manager of a $10 million investment fund. The fund is invested in three assets with the following investments and betas: Investment Beta 1.80 0.75 1.20 The remainder is invested in T-bills (risk free asset) with 3% return. a. If the market expected rate of return is 9% what is the fund's expected rate of return? b. Using Funds A and B, create a portfolio (report the portfolio weights and $ investment out of $10 million) with a 0.92 beta. Stock A B C $3,000,000 2,000,000 4,000,000arrow_forwardA hedge fund charges a management fee of 3 percent and an incentive fee of 25 percent for all returns over a benchmark return of 4%. The risk-free rate is 2% and the standard deviation of the funds continuously compounded returns has been 23%. The current net asset value is $55 per share. What is the value of all fees expressed as a percent at the start of the investment period?arrow_forward
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