If a Hedge Fund Has a 2/20 Fee Structure and $15

question 68

Multiple Choice

If a hedge fund has a 2/20 fee structure and $15 million of assets under management, how much will its annual management fee be?

• A)$300
• B)$3,000
• C)$30,000
• D)$300,000
• E)$3,000,000

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Definitions:

Total Profit

The total income of a business after subtracting all expenses from the total revenue obtained from sales and other sources.

Profit-Maximizing

Profit-maximizing is the process by which a firm determines the price and output level that returns the greatest profit.

Marginal Cost

The surplus cost involved in the production of an extra unit of a product or service.

Average Revenue

Average revenue is the amount of income generated per unit of goods or services sold, calculated by dividing the total revenue by the number of units sold.