Compute the fee that the manager will earn in dollars

Assignment Help Business Economics

Reference no: EM131197611

A hedge fund currently has assets of $500 million. The annual fee structure of this fund consists of a fixed fee of 1% of portfolio assets plus a 20% incentive fee. The fund applies the incentive fee to the gross return each year in excess of the portfolio’s previous high watermark, which is the maximum fund value in the past two years. The fund is closed to new investors and the maximum value that the fund has achieved in the past two years was $520 million. Compute the fee that the manager will earn, in dollars, if the return on the fund in the coming year turns out to be:

a. 30% b. 2% c. -2%

Reference no: EM131197611

Questions Cloud

Capital structure might signal the market and investors : North Sea Oil has compiled the following data relative to current costs of its basic sources of external capitals, long-term debt, preferred stock, and common stock equiy. Assuming the project(s) is implemented using equity financing, the capital str..

Inverse relationship between bond prices and yields : There is an inverse relationship between bond prices and yields. This inverse relationship will be demonstrated by calculating bond prices to show that interest rates move inversely: if yields rise, then bond prices fall. Bonds will be sold either at..

Capital budgeting decision methods : In a book named "Cases in Financial Management." Chicao Valve Company (Revised) case 11 Topic - Capital Budgeting Decision Methods, question What is the project's NPV? Explain the economic rationale behind the NPV. Could the NPV of this particular pr..

Describe a potential capital expenditure project : Describe a potential capital expenditure project from the industry in which you now work or an industry in which you are interested. What is the project? Describe and provide an approximate value of the initial cash flow. Describe and provide an appr..

Compute the fee that the manager will earn in dollars : A hedge fund currently has assets of $500 million. The annual fee structure of this fund consists of a fixed fee of 1% of portfolio assets plus a 20% incentive fee. Compute the fee that the manager will earn, in dollars, if the return on the fund in ..

Determine the expected net present value of the project : An investor estimates that investing €5 million in a particular venture capital project can return $40 million at the end of five years if it succeeds; however, she realizes that the project may fail at any time between now and the end of the fifth y..

Irr calculation : Determine the IRR on the following projects: An initial outlay of $10,000 resulting in a free cash flow of $1,993 at the end of each year for the next 10 years. An initial outlay of $10,000 resulting in a free cash flow of $2,054 at the end of each y..

Portfolio weight becomes negative after the short selling : Suppose you have $2,000 in your E*Trade account. You borrow $1,000 and invest all $3,000 in the Intel stock. Determine your portfolio weight Wintel and Wcash. Suppose you have $2,000 in your E*Trade account. You sell short some Intel shares and recei..

What is its present value and its future value : PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 11% annua..

User Account

All Pages