Regarding hedge fund incentive fees, hedge fund managers ______ if the portfolio return is very large and ______ if the portfolio return is negative.

Question

Quizplus · Accepted Answer

Hedge fund managers typically earn incentive fees based on the fund's performance. If the portfolio return is very large, they get the fee as a percentage of the profits. If the portfolio return is negative, they do not earn an incentive fee but do not have to refund any fees already earned, thus losing nothing except the opportunity to earn the incentive fee.

Regarding Hedge Fund Incentive Fees, Hedge Fund Managers ______ If