The rate of return after paying incentive fees to an investor in fund of funds. Introduction: Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Question

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Answer 1

Question

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

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Suppose that a mutual fund agent approaches you and promote a fund which allows you to withdraw money from your Employment Provident Fund (EPF) to invest. From the analysis of the agent, the fund expected to pay up to 11% return, and you know that EPF paid an average 6% return and treasury’s return fixed at 2.75%. Based on the discussion in this chapter and in your opinion, are you going to take the investment? Justify your answer

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As an individual investor, you have three funds to invest into. The first is an equity fund, the second is a corporate bond fund, and the third is a T-bill money-market fund (your risk-free asset). Fund Expected rate of return Risk (Standard deviation) Equity fund 16% 32% Corporate bond fund 12% 18% T-bill money market fund 2% Correlation between equity fund and bond fund returns is 0.4. Find the Expected return of the minimum variance portfolio formed from Equity and Bond funds

Answer 2

Question

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

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Answer 3

Question

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

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Answer 4

Question

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

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Answer 5

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 6

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 7

Chapter 26, Problem 17PS

a.

Summary Introduction

To compute: The rate of return after paying incentive fees to an investor in fund of funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 8

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 9

b.

Summary Introduction

Adequate information:

To compute: The value of the investor’s portfolio at the end of the year.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 10

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 11

c.

Summary Introduction

To evaluate: The investor’s rate of return in SA fund is higher than in FF.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 12

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 13

d.

Summary Introduction

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 14

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 15

e.

Summary Introduction

Adequate information:

To evaluate: Whether the FF and SA funds will charge incentive fees.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 16

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 17

f.

Summary Introduction

To evaluate: The reason behind the investor of FF still doing worse than the investor in SA funds.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Answer 18

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Answer 19

Expert Solution & Answer

Answer 20

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Answer 21

Ch. 26 - Prob. 1PS Ch. 26 - Prob. 2PS Ch. 26 - Prob. 3PS Ch. 26 - Prob. 4PS Ch. 26 - Prob. 5PS Ch. 26 - Prob. 6PS Ch. 26 - Prob. 7PS Ch. 26 - Prob. 8PS Ch. 26 - Prob. 9PS Ch. 26 - Prob. 10PS

Solution Summary: The author explains how to calculate the rate of return after paying incentive fees to an investor in a hedge fund.

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

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Chapter 26 Solutions

Solution Summary: The author explains how to calculate the rate of return after paying incentive fees to an investor in a hedge fund.

To evaluate: The investor’s rate of return in SA fund is higher than in FF. Introduction: Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

To compute: The return on the portfolio held by hedge fund. Introduction: Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.

Want to see the full answer?

Chapter 26 Solutions

To compute: The return on the portfolio held by hedge fund.

Introduction:

Hedge Fund: Nowadays, the individual investments of different investors are collected and pooled. Later, this consolidated amount is reinvested in assets. The consolidated amount can be termed as hedge fund.