A hedge fund adopts the 2/20 regime for managers' compensation. It also adopts the T-bill return as benchmark. T-bill returned 5% per year in the past 2 years. The hedge fund had 0% return in first year. What 2nd year's return must it deliver for the manager to realize any incentive fees?

A hedge fund adopts the 2/20 regime for managers' compensation. It also adopts the T-bill return as benchmark. T-bill returned 5% per year in the past 2 years. The hedge fund had 0% return in first year. What 2nd year's return must it deliver for the manager to realize any incentive fees?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter12: Professional Venture Capital

Section: Chapter Questions

Problem 14DQ

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