A Hedge Fund Sets Its Fee at 2% and a 20

question 18

Multiple Choice

A hedge fund sets its fee at 2% and a 20% carry with an 8% benchmark. How much money will a hedge fun make in fees over the course of a year if AUM started at $2,000,000 and ended the year at 2,300,000?

• A) $68,300
• B) $74,000
• C) $80,400
• D) $92,040

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Definitions:

Bulk Flow

A movement of molecules from an area of higher pressure to an area of lower pressure, typically referring to fluids and gases.

Adenine

A purine nucleobase, one of the four nucleobases in the nucleic acid of DNA and RNA, paired with thymine in DNA and with uracil in RNA.

ATP

Adenosine triphosphate, a molecule that stores and transfers energy within cells, thereby powering a multitude of cellular processes.