EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 26, Problem 10PS
Summary Introduction
To determine:
The levels of incentive value as it will on upper side or lower side if the high water mark of a hedge fund having value of
Introduction:
High water mark is the mark set for the investment's highest value return. This mark is set to ascertain the performance of fund manager.
Incentive fees is the amount charged by t he fund managers to achieve an excess return over the set criteria of the rate of investment.
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Students have asked these similar questions
What is the primary trading cost for a hedge fund that manages a large fund (e.g., $1 billion in total equity capital).
O A. Commissions
B. Bid-ask spreads.
O. The slope of the market impact (or price impact) curve.
O D. Large hedge funds benefit from economies of scale when it comes to trading costs, in which case none of the above are important.
A mutual fund that aggressively seeks capital growth:
#
O A. will have an MER that is higher than a global fund.
OB. will have an MER that is approximately the same as a T-bill fund.
OC. will have an MER that reflects the increased costs of research.
OD. will have an MR similar to that of a fixed-income fund.
The market risk premium is defined as __________.
A. the difference between the return on an index fund and the return on Treasury bills
B. the difference between the return on a small firm mutual fund and the return on the Standard and Poor's 500 index
C. the difference between the return on the risky asset with the lowest returns and there turn on Treasury bills
D. the difference between the return on the highest yielding asset and the lowest yielding asset
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