Hedge Funds Managers Are Compensated by ___________________

question 30

Multiple Choice

Hedge funds managers are compensated by ___________________.

• A) deducting management fees from fund assets and receiving incentive bonuses for beating index benchmarks
• B) deducting a percentage of any gains in asset value
• C) selling shares in the trust at a premium to the cost of acquiring the underlying assets
• D) charging portfolio turnover fees

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Definitions:

Operating Expenses

The costs related to the day-to-day operations of a business, excluding cost of goods sold.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods a company has sold during a period.

Taxable Income

The portion of individual or corporate income subject to taxation, after all deductions and exemptions.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested in the business or used to pay off debt.