Portfolio managers are frequently paid a proportion of the funds under management Suppose you manage a $100 million equity portfolio offering a dividend yield (DIV1 P0 of 5 Dividends and portfolio value are expected to grow at a constant rate Your annual fee for managing this portfolio is 5 of port...

Assume the portfolio value given 100 million is the value as of the end of the first year Then ass ...

Portfolio managers are frequently paid a proportion of the funds under management. Suppose you manage a $100

Question:

managers are frequently paid a proportion of the funds under management. Suppose you manage a $100 million equity offering a yield (DIV1 / P0 of 5%. Dividends and value are expected to grow at a constant rate. Your annual fee for managing this is .5% of value and is calculated at the end of each year. Assuming that you will continue to manage the from now to eternity, what is the present value of the management contract? How would the contract value change if you invested in with a 4% yield?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...