If the Risk-Free Interest Rate Is Rf and Equals the Fund's

question 52

Multiple Choice

If the risk-free interest rate is rf and equals the fund's benchmark, the portfolio's net asset value is S0, and the hedge fund manager incentive fee is 20% of profit beyond that, the incentive fee is equivalent to receiving ________ call(s) with exercise price ________.

• A) .2; S₀
• B) 1; S₀(1 + r_f)
• C) 1.2; S₀
• D).2; S₀(1 + r_f)

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Definitions:

Activity-Based Costing

Activity-based costing is a method of allocating overhead costs to products or services based on the activities that consume resources, aiming for more accurate product costing.

Processing Orders

The activities involved in receiving, handling, and fulfilling customer orders, which may include stages like order entry, picking, packing, shipping, and handling returns.

Time-Driven

A methodology that calculates costs based on the time required to produce goods or services.

Activity-Based Costing

A method of accounting in which costs are assigned to products or services based on the activities required for their production or delivery.