Consider a Hedge Fund with $200 Million at the Start

question 51

Multiple Choice

Consider a hedge fund with $200 million at the start of the year. The benchmark S&P 500 index was up 16.5% during the same period. The gross return on assets is 21% and the expense ratio is 2%. For each 1% above the benchmark return the fund managers receive 0.1% incentive bonus. What was the management cost for the year?

• A)$4 877 000
• B)$4 900 000
• C)$5 929 000
• D)$6 446 000

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Definitions:

Economy

A system of production, distribution, and consumption of goods and services within a particular territory or entity.

Logging Company

A business involved in cutting down trees, processing timber, and possibly engaging in forestry management and sales of wood products.

Secondary Sector

Part of the economy that involves industrial activity, including manufacturing and construction, that processes raw materials into finished goods.

Economy

The large set of interrelated production, consumption, and exchange activities that aid in determining how scarce resources are allocated.