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

question 8

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.
-Assuming 2% management fee,what is the expected management compensation per share if the fund net asset value exceeds the stated benchmark?

• A) $4.24
• B) $4.00
• C) $3.84
• D) $2.20

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Definitions:

Quasi Contract

An obligation imposed by law to prevent unjust enrichment, even though no formal contract exists between the parties.

Remedies

The means by which a right is enforced or the violation of a right is prevented, redressed, or compensated.

Sale of Goods

A transactional agreement between a seller and a buyer for the exchange of personal property for a certain price.

Complete Construction

The process of finishing a building or construction project in all its parts, fully executed according to the plan and specifications.