Citadel LLC is one of largest hedge fund firms in the United States. Citadel now holds $360 billion in its hedge fund account. Citadel charges a 2% management fee based on assets under management at year end, and a 20% incentive fee. In its first year, Citadel appreciates 19.20%. Calculate the investor’s net return. Assume that management fees are calculated using end-of-period valuation, the performance fee is calculated net of the management fee, and no hurdle rate on its performance. A. 13.45% B. 17.25% C. 21.25% D. 24.65%

Citadel LLC is one of largest hedge fund firms in the United States. Citadel now holds $360 billion in its hedge fund account. Citadel charges a 2% management fee based on assets under management at year end, and a 20% incentive fee. In its first year, Citadel appreciates 19.20%. Calculate the investor’s net return. Assume that management fees are calculated using end-of-period valuation, the performance fee is calculated net of the management fee, and no hurdle rate on its performance. A. 13.45% B. 17.25% C. 21.25% D. 24.65%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 7P

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