A private equity fund:
I.is set up as a limited partnership
II.usually use a 2/20 fee structure
III.place no constraints on manager compensation
IV.typically have a stated life of 7 to 10 years

Question

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Private equity funds are set up as limited partnerships, and typically have a stated life of 7 to 10 years. They usually use a 2/20 fee structure, which means the managers receive a 2% management fee and 20% of the profits. However, private equity funds may still place constraints on manager compensation depending on the terms of the partnership agreement.

A Private Equity Fund