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- ASAP 65.You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees and a 2% back-end load, which decreases .5% per year. How much will you pay in fees on a $10,000 investment that does not grow if you cash out after 3 years of no gain? $635 $219 $553 $103 66.The five-star Morningstar rating implies superior returns compared to risk. lowest turnover compared to peers. superior risk compared to return. lowest fees compared to peers.1. A mutual fund with K100 million in assets at the start of the year and with 10 million shares outstanding invests in a portfolio of stocks that provides no income but increases in value by 10 %. Required: What is the rate of return in the fund? If a fund has an initial NAV of K20 at the start of the month makes income distributions K0.15 and capital gain distributions of K0. 05 and ends the month with NAV of K20.10. Calculate the monthly rate of return. 2. An equity fund has a front end load of 4 % and special fees of 0.5% annually as well as back-end fees that start at 5 % and fall by 1 % for each full year the investor holds the portfolio until the fifth year. Assuming the rate of return on the fund net of operating expenses is 10 % annually, what will be the value of a K10 000 investment in the equity fund shares if the shares are sold after 1 year, 4 years and 10 years?You have made a $400,000 investment in a hedge fund that has a 2/20 fee structure. The fund has a total of $25 million of assets under management and provides a return of 10% in the first year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year in which they are applicable. How much will you pay in management and performance fees for the year? Multiple Choice A)$1,000; $10,250 B)$1,000; $10,700 C)$8,000; $10,250 D)$8,000; $6,240 E)$6,240; $9,000
- Y2 .You invest $100,000 in a hedge fund with a 2/20 fee structure. For the next 3 years, the hedge fund earns annual returns of 25.93%, -13.03%, and 75.34%. You make no withdrawals from the fund. Whenever fees are due, you write a check for that amount to the fund (such that the fund doesn't deduct the fees from your portfolio value). The fund's fee structure has a high watermark feature. What are the total fees you pay over the course of the three years? Enter a number with two decimal points. Answer the question in dollar amount, i.e., if the answer is $20, enter 20.00.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 with $25 million of assets under management has a standard 2/20 fee structure and earns 14 percent this year. Assume that management fees are paid at the beginning of each year and performance fees are paid at the end of each year. Assume that the fund’s fee structure also contains a high-water mark provision. What is the management fee collected by the fund managers? What is the performance fee collected by the fund managers? What is the investor’s net return?
- A mutual fund with K100 million in assets at the start of the year and with 10 million shares outstanding invests in a portfolio of stocks that provides no income but increases in value by 10 %. Required: a. What is the rate of return in the fund? b. If a fund has an initial NAV of K20 at the start of the month makes income distributions K0.15 and capital gain distributions of K0. 05 and ends the month with NAV of K20.10. Calculate the monthly rate of return. c. An equity fund has a front end load of 4 % and special fees of 0.5% annually as well as back-end fees that start at 5 % and fall by 1 % for each full year the investor holds the portfolio until the fifth year. Assuming the rate of return on the fund net of operating expenses is 10 % annually, what will be the value of a K10 000 investment in the equity fund shares if the shares are sold after 1 year, 4 years and 10 years?7. Impacts of Costs on Returns. A mutual fund has a 1.69% expense ratio and begins with a $124.655 NAV. It experiences the annual returns shown below. What are the end-of-year NAVs after fees for each year? What are the after-fee returns each year?A high-water mark of $115.25 million was established two years ago for Korean Fried Chicken (KFC) hedge fund. The end-of-year value before fees for last year was $124.58 million. This year’s end-of-year value before fees is $145.50 million. The fund charges “2 and 20.” Management fees are paid independently of incentive fees and are calculated on end-of-year values. What is the total fee paid this year? A. $9.91 million B. $8.96 million C. $7.78 million D. $6.87 million
- Finance ***don’t use excel to solve*** PIMCO Equity Fund has a 3% load. Annual fees are 0.35%, and the expected average annual return for the next 7 years is 11% annually. Vanguard Equity Fund is a no-load fund. Its expected average return for the next 7 years is 10% with annual fees of 1.1%. If you hold both investments for 2 years, which one is the better investment? You believe PIMCO is a better long-term investment. How long must you hold the PIMCO Fund to achieve higher average annual returns than an investment in Vanguard?A hedge fund following the 2 & 20 approach has $150 Billion under management. Assuming the fund has not earned any profits over the past year how much will it earn in fees? $30,000,000,000 $20,000,000 $3,000,000,000 $117,000,000,000You are considering an investment in a mutual fund with a 4% load and expense ratio of 0.5%. You can invest instead in a bank CD paying 6% interest.a. If you plan to invest for 2 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Round your answer to 2 decimal places.)