Which of the Following Is Correct Regarding the Compensation Paid

question 56

Multiple Choice

Which of the following is correct regarding the compensation paid to private equity fund managers?

• A)Managers typically receive 20 percent of fund profits but no separate management fee.
• B)Managers typically receive a high percentage management fee but no portion of fund profits.
• C)Management compensation is usually subject to a clawback provision to limit the performance fees.
• D)"Carried interest" refers to the interest fund managers earn on performance fees.
• E)Fees paid to fund managers do not reduce the net return of the fund.

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Definitions:

Cafeteria Plans

Employee benefit plans that allow workers to choose from a variety of pre-tax benefits, including health insurance, retirement contributions, and flexible spending accounts.

Scholarship

A financial award given to students to support education, based on academic or other achievements, that does not require repayment.

Assistantship

A form of academic employment offered to students, typically involving teaching or research in exchange for a stipend and possibly tuition waiver.

State University

A publicly funded university maintained by a state government that typically offers lower tuition costs to in-state residents.