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A $20 million fund with 10% incentive fees and 1% management fees that lasts 4 years, earns a profit of +10%, +6%, +3%, +4%, and a loss of -10% in each of the first five years. What is the percentage of beginning NAV that is earned by the Hedge fund at the end of five years? Show how this percentage varies when the hurdle rate is 0%, 5%, and 10%. Make any necessary assumption as required.

A $20 million fund with 10% incentive fees and 1% management fees that lasts 4 years, earns a profit of +10%, +6%, +3%, +4%, and a loss of -10% in each of the first five years. What is the percentage of beginning NAV that is earned by the Hedge fund at the end of five years? Show how this percentage varies when the hurdle rate is 0%, 5%, and 10%. Make any necessary assumption as required.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
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A $20 million fund with 10% incentive fees and 1% management fees that lasts 4 years, earns a profit of +10%, +6%, +3%, +4%, and a loss of -10% in each of the first five years. What is the percentage of beginning NAV that is earned by the Hedge fund at the end of five years? Show how this percentage varies when the hurdle rate is 0%, 5%, and 10%. Make any necessary assumption as required.
Transcribed Image Text:A $20 million fund with 10% incentive fees and 1% management fees that lasts 4 years, earns a profit of +10%, +6%, +3%, +4%, and a loss of -10% in each of the first five years. What is the percentage of beginning NAV that is earned by the Hedge fund at the end of five years? Show how this percentage varies when the hurdle rate is 0%, 5%, and 10%. Make any necessary assumption as required.
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