Problem 20-5 (Algo)
A hedge fund with $2.2 billion of assets charges a management fee of 2% and an incentive fee of 15% of returns over a money market rate, which currently is 6%.
Required:
Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of:
Note: Enter your answers in millions rounded to 1 decimal place.
Answer is complete but not entirely correct.
Portfolio
Rate of
Return (%)
Total Fee
($ million)
Total Fee
(%)
a.
-2
22.0
1.0
b.
0
22.0
1.0
c.
5.6
22.0
1.0
d.
14
44.0
2.0