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 receive a performance-based incentive fee that is a percentage of the profits generated from the portfolio. They receive this fee when the portfolio return is positive but do not receive any additional compensation when the return is negative, except for potentially losing investors who may withdraw their funds. The management fee, which is typically a fixed percentage of the assets under management, is paid regardless of portfolio performance. Therefore, the correct answer is that hedge fund managers get the fee (incentive fee) if the portfolio return is very large and lose nothing except the incentive fee if the portfolio return is negative.

Regarding Hedge Fund Incentive Fees,hedge Fund Managers ______ If the Portfolio