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(Solved): 25. A hedge fund charges 2 plus 15%. Investors want a return after fees of 20%. How much does the h ...
25. A hedge fund charges 2 plus 15%. Investors want a return after fees of 20%. How much does the hedge fund have to earn, before fees, to provide investors with this return? Assume that the incentive fee is paid on the net return after management fees have been subtracted. A. 27% B. 25.5% C. 21.6% D. 20%
Expert Answer
25) B (Ans) " 2 plus 15%" implies that the hedge fund charges 2% per year of assets under management and 15% of net profits. Return after fees =