Assume the Risk-Free Interest Rate Is 10% and Is Equal

question 22

Multiple Choice

Assume the risk-free interest rate is 10% and is equal to fund's benchmark, the portfolio net asset value is $100 and the fund's standard deviation is 20%. Also assume time horizon of 1 year. What is the exercise price on the incentive fee?

• A)$100
• B)$105
• C)$110
• D)$115

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Definitions:

Market Share

The percentage of an industry's sales that is earned by a particular company over a specific time period.

Stakeholders' Welfare

This refers to the interest or well-being of all the parties involved or affected by a company's operations, including employees, customers, investors, and the community.

Profit Minimization

A less common business strategy focused on minimizing profits, often used for tax benefits or non-profit objectives.

Social Responsibility

The ethical framework suggesting that entities, whether individuals or organizations, have an obligation to act for the benefit of society at large.