5-99 Which of the Following Are Used to Link the Hedge

question 83

Multiple Choice

5-99 Which of the following are used to link the hedge fund manager's incentives more closely to those of the fund investors and to reduce the manager's incentive to increase the risk of trades?

• A)High-water marks.
• B)Discount rates.
• C)Trade limits.
• D)Management fees.
• E)Low hurdle rates.

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Definitions:

Ordinary Annuity

A series of equal payments or receipts that occur at the end of each period of a specified length of time.

Compounded Monthly

Interest calculation method where the interest is calculated and added to the principal balance each month, allowing for the interest to then earn interest in subsequent months.

Monthly Payment

A specific amount of money that is paid every month, commonly associated with loans or leases.

Effective Rate of Return

The actual annual interest earned or paid on an investment or loan, considering the effect of compounding.