(a) To calculate: The return to an investor computed after considering the incentive fees of total returns at 20 % in the fund of funds. Introduction: The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities. An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Question

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Answer 1

Question

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

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Answer 2

Question

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Expert Solution & Answer

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Answer 3

Question

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

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Answer 4

Question

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Expert Solution & Answer

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Answer 5

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 6

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 7

Chapter 20, Problem 19C

Summary Introduction

(a)

To calculate:

The return to an investor computed after considering the incentive fees of total returns at 20% in the fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 8

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 9

Summary Introduction

(b)

To calculate:

The value of portfolio for the investor made by a standalone hedge fund, which purchases the same three underlying funds, after paying the incentive fees of 20% at the end of the year.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 10

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 11

Summary Introduction

(c)

To determine:

There is a difference of an amount, which is equal to the extra fees charged by fund of funds, which shows that the return of investor in standalone fund is higher than the one in fund of funds.

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

Incentive fees is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 12

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 13

Summary Introduction

(d)

To calculate:

The value of portfolio in both the funds and the rate of return of portfolio, if the return on portfolio in hedge fund 3 is −30%

Introduction:

The hedge fund is that type kind of fund in which there is no interference of government and law. This fund is a private pool fund which made from taking money from the big investors & close people and invests them in different kinds of securities.

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 14

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 15

Summary Introduction

(e)

To detemine:

The observation on the charging of incentive fees in case of return on portfolio in hedge fund 3 is negative by standalone or fund of funds and the reason for bad condition of investors in fund of funds than the investors of standalone.

Introduction:

An incentive fee is the amount charged by the fund managers to achieve an excess return over the set criteria of the rate of investment.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 20 - Prob. 1PS Ch. 20 - A fund manages a 3.6 billion equity portfolio with...Ch. 20 - Prob. 3PS Ch. 20 - Prob. 4PS Ch. 20 - Which of the following would be the most...Ch. 20 - Prob. 6PS Ch. 20 - Which of the following hedge fund types is most...Ch. 20 - Prob. 8PS Ch. 20 - Prob. 9PS Ch. 20 - Is statistical arbitrage true arbitrage? Explain....

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Chapter 20 Solutions