1. Which investment fund generally has the least amount of liquidity?
A. Hedge fund. B. Closed-end fund. C. Private equity fund.
2. Which of the following fee structures most likely has no impact on the volatility of a portfolio’s net returns?
A. Incentive fees only. B. Management fees only. C. Neither incentive fees nor management fees.
3. Fund X earns a –3% gross return for the year. The computed management fee is equal to a base fee of 2% plus a 20% sharing of both positive and negative performance. The sharing is based on return net of the base fee. What is Fund X’s total management fee for the year?
A. 1.0%. B. 1.4%. C. 2.0%.
4. Fund Y earns a gross return of 12% for the year, while the relevant benchmark earns 3%. The computed management fee is equal to the higher of either a base fee of 0.4%, or base plus a 20% sharing of positive performance, up to a maximum annual fee of 2.9%. The sharing is based on active return. What is Fund Y’s total management fee for the year?
1. Which investment fund generally has the least amount of liquidity?
A. Hedge fund.
B. Closed-end fund.
C. Private equity fund.
2. Which of the following fee structures most likely has no impact on the volatility of a portfolio’s net returns?
A. Incentive fees only.
B. Management fees only.
C. Neither incentive fees nor management fees.
3. Fund X earns a –3% gross return for the year. The computed management fee is equal to a
base fee of 2% plus a 20% sharing of both positive and negative performance. The sharing
is based on return net of the base fee. What is Fund X’s total management fee for the year?
A. 1.0%.
B. 1.4%.
C. 2.0%.
4. Fund Y earns a gross return of 12% for the year, while the relevant benchmark earns 3%.
The computed management fee is equal to the higher of either a base fee of 0.4%, or base
plus a 20% sharing of positive performance, up to a maximum annual fee of 2.9%. The
sharing is based on active return. What is Fund Y’s total management fee for the year?
A. 2.2%.
B. 2.8%.
B. 2.9%.