Answer all five (5) questions.

1. A hedge fund charges 2 plus 20%. Investors want a return after fees of 20%. How much does the hedge fund have to earn, before fees, to provide investors with this return? Assume that the incentive fee is paid on the net return after management fees have been subtracted. 2. The bidders in a Dutch auction are listed below: Bidder # Shares Price A 60,000 $50.00 B 20,000 $80.00 C 30,000 $55.00 D 40,000 $38.00 E 40,000 $42.00 F 40,000 $42.00 G 50,000 $35.00 H 50,000 $60.00 The number of shares being auctioned is 210,000. What is the price paid by investors? How many shares does each investor receive? 3. What are the differences between selling a stock short, and buying a put option? Discuss the pros and cons of each. 4. Suppose you write a put contract with a strike price of $40 and an expiration date in three months. The current stock price is $41 and the contract is on 100 shares. What have you committed yourself to? How much could you gain or lose? 5. What is the Originate-to-Distribute Model?