The Typical Hedge Fund Fee Structure Is

question 47

Multiple Choice

The typical hedge fund fee structure is

• A) a management fee of 1% to 2%.
• B) an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance.
• C) a 12-b1 fee of 1%.
• D) a management fee of 1% to 2% and an annual incentive fee equal to 20% of investment profits beyond a stipulated benchmark performance.
• E) a management fee of 1% to 2% and a 12-b1 fee of 1%.

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Definitions:

Face Value

the nominal value or original cost of a security as stated by the issuing authority, not necessarily its market value.

Proceeds

The total amount of money received from a sale or transaction.

Discount

A reduction in the price of a product or service, usually to encourage sales or as an allowance for prompt payment.

Issuing Corporation

A company or entity that releases (issues) securities, such as stocks or bonds, to raise capital.