which currently is 6%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of: (Enter your answers in millions rounded to 1 decimal place.) Portfolio Rate of Return (%) a. -3 b. 0 c. 6 d. 12 Total Fee ($ million) 12.0 Total Fee (%) NNN 2.0 2.0 2.0

which currently is 6%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of: (Enter your answers in millions rounded to 1 decimal place.) Portfolio Rate of Return (%) a. -3 b. 0 c. 6 d. 12 Total Fee ($ million) 12.0 Total Fee (%) NNN 2.0 2.0 2.0

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A hedge fund with $1 billion of assets charges a management fee of 2% and an incentive fee of 20% of returns over a money market rate, which currently is 5%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of:a. −5%b. 0c. 5%d. 10%
Hello, can you show how this shoould be made A hedge fund with $1 billion of assets charges a management fee of 2% and an incentive fee of20% of returns over a money market rate, which currently is 5%. Calculate total fees, both indollars and as a percent of assets under management, for portfolio returns of:a. −5%b. 0c. 5%d. 10%
Harlequin Capital is a hedge fund with $250 million of initial capital. Harlequin charges a 2% management fee based on assets under management at year end, and a 20% incentive fee based on returns in excess of an 8% hurdle rate. In its first year, Harlequin appreciates 16%. Assume management fees are calculated using end-of-period valuation. Calculate the investor’s net return assuming the performance fee is calculated net of the management fee.
A hedge fund charges a management fee of 3 percent and an incentive fee of 25 percent for all returns over a benchmark return of 4%. The risk-free rate is 2% and the standard deviation of the funds continuously compounded returns has been 23%. The current net asset value is $55 per share. What is the value of all fees expressed as a percent at the start of the investment period?
ABC CAPITAL is a hedge fund with $300 million of initial investment capital. They charge a 2 percent management fee based on assets under management at year- end and a 20 percent incentive fee. In its first year, ABC Capital has a 80 percent return. Assume management fees are calculated using end-of-period valuation. 1. What are the fees earned by ABC if the incentive and management fees are calculated independently? What is an investor’s effective return given this fee Structure? 2. What are the fees earned by ABC assuming that the incentive fee is calculated based on return net of the management fee? What is an investor’s net return given this fee structure? 3. If the fee structure specifies a hurdle rate of 5 percent and the incentive fee is based on returns in excess of the hurdle rate, what are the fees earned by ABC assuming the performance fee is calculated net of the management fee? What is an investor’s net return given this fee structure? 4. In the second year, the fund…
You create a portfolio consisting of $23000 invested in a mutual fund with beta of 1.3, $25000 invested in Treasury Securities (assume risk-free), and $12000 invested in an index fund tracking the market. According to surveys, the expected market risk premium is 6.6%, risk free rate is 1.3%. What is the expected return of this portfolio according to CAPM? Answer in percent, rounded to one decimal place.
ABC CAPITAL is a hedge fund with $300 million of initial investment capital. They charge a 2 percent management fee based on assets under management and a 20 percent incentive fee. In its first year, ABC Capital has a 20 percent return. Assume management fees are calculated using beginning-of-period valuation. 1. What are the fees earned by ABC if the incentive and management fees are calculated independently? What is an investor’s effective return given this fee Structure? 2. What are the fees earned by ABC assuming that the incentive fee is calculated based on return net of the management fee? What is an investor’s net return given this fee structure? 3. If the fee structure specifies a hurdle rate of 5 percent and the incentive fee is based on returns in excess of the hurdle rate, what are the fees earned by ABC assuming the performance fee is calculated net of the management fee? What is an investor’s net return given this fee structure? 4. In the second year, the fund value…
Calculate the required rate of return for the Wagner Assets Management Group, which holds 4 stocks. The market's required rate of return is 17.0%, the risk-free rate is 7.0%, and the Fund's assets are as follows: Stock Investment Beta A $200,000 1.50 B 300,000 −0.50 C 500,000 1.25 D 1,000,000 0.75 Select the correct answer
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%
A mutual fund company has cash resources of birr 200 million for investment in a diversified portfolio. Table below shows the opportunity available, their estimated yields, risk factors and term period of details. Annual yield (%) Risk Factor Time period ( years) Bank deposit 9.5 0.02 6 treasury notes 8.5 0.01 4 corporate deposits 12.0 0.08 3 blue chip stocks 15.0 0.25 5 speculative stocks 32.5 0.45 3 real estates 35.0 0.04 10 Formulate the L.P. model to find the optimal portfolio that will maximize return, considering the following policy guidelines: i) All funds available may be invested ii) Weighted average period of at least 5 years should be the planning horizon iii) Weighted average risk factor must not exceed 0.20 iv) Investment in real estate and speculative stocks together must not be more than 25% of the money invested
The quoted rate of the short-term government security is 5% and a 2% premium is added to rate to reflect the market return. What is the required rate of return of the portfolio? (In percentage, put percentage sign) Blue Co. has an investment fund consist of three stocks as follows: STOCK INVESTMENT BETA ABC 500,000 1 DEF 1,250,000 0.8 XYZ 750,000 1.5
Consider a mutual fund with OMR400 million in assets at the start of the year and with 20 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of OMR4 million. The stocks included in the portfolio increases in price by 10%, but no securities are sold and there are no capital gain distributions. The fund charges fees of 3%, which are deducted from the portfolio assets at year end. What is the net asset value at the start and end of the year? What is the rate of return for an investor in the fund?

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