INVESTMENTS(LL)W/CONNECT
INVESTMENTS(LL)W/CONNECT
11th Edition
ISBN: 9781260433920
Author: Bodie
Publisher: McGraw-Hill Publishing Co.
Question
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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:

  INVESTMENTS(LL)W/CONNECT, Chapter 26, Problem 17PS , additional homework tip  1

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:

  INVESTMENTS(LL)W/CONNECT, Chapter 26, Problem 17PS , additional homework tip  2

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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