easy · CFA Level I alts
A hedge fund with a high-water mark of $120 million currently has a NAV of $110 million.
If the fund gains 15% in the following period, on what portion of the gain can the manager charge an incentive fee?
- No incentive fee is possible until the fund reaches its initial $100 million inception value.
- Only the portion of the gain that exceeds the 120 million mark.
- On the full 15% gain (16.5 million).
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