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:

Period

A duration of time used for financial or operational evaluation.

Risk Premium

The extra return expected by investors for taking on additional risk compared to a risk-free asset.

Securities Categories

Classifications of financial instruments based on their characteristics, such as stocks, bonds, and derivatives.

Small-company Stocks

Shares issued by companies with a small market capitalization, often characterized by higher volatility and risk, but also potential for significant growth.