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

question 43

Multiple Choice

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

• A) $100
• B) $105
• C) $110
• D) $115

---

Definitions:

Psychological Development

The growth and change in a person's emotions, cognition, behavior, and abilities over the course of their life.

Primary Process Thinking

A mode of thought in psychoanalytic theory, characterized by primitive, illogical, and fantasy-oriented thought processes, typically associated with the unconscious mind.

Secondary Process Thinking

In psychoanalytic theory, the term for rational and conscious processes of ordinary thought.

Freudian Perspective

A psychological view based on Sigmund Freud's theories that focus on unconscious processes and childhood experiences affecting behavior.