4. CMD Asset Management has the following fee structure for clients in its equity fund:1.00% of first $5 million invested0.75% of next $5 million invested0.60% of next $10 million invested0.40% above $20 milliona. Calculate the annual dollar fees paid by Client 1, who has $27 million under manage-ment, and Client 2, who has $97 million under management.b. Calculate the fees paid by both clients as a percentage of their assets undermanagement.c. What is the economic rationale for a fee schedule that declines (in percentage terms)with increases in assets under management?

a. The annual dollar fees paid by client 1 is calculated below:

Answered: 4. CMD Asset Management has the…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter3: The Financial Environment: Markets, Institutions And Investment Banking

Section: Chapter Questions

Problem 9PROB

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