Which of the Following Best Describes the 2/20 Fee That

question 74

Multiple Choice

Which of the following best describes the 2/20 fee that is used by most hedge funds?

• A)The fund pays a 2% management fee and gives 20% of the profits to the investor.
• B)The fund pays a 2% management fee and keeps 20% of the profits.
• C)The investor pays a 2% management fee and receives 20% of the profits.
• D)The investor pays a 20% management fee and receives 80% of the profits.
• E)The investor pays a 2% management fee and gives 20% of the profits to the fund manager.

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Definitions:

Extension of Time

An allowance by the IRS giving taxpayers extra time to file their tax returns beyond the original due date.

Married Filing Separately

A tax filing status that allows a married individual to file their taxes separately from their spouse.

Legally Married

The status of individuals who are united in a legal marriage recognized by their jurisdiction, affecting tax filing status.

D4 Follower

A term used in situational leadership to describe individuals who are highly competent and highly committed, requiring a delegating leadership style.