CMD Asset Management has the following fee structure for clients in its equity fund:

0.95	%	of first $4 million invested
0.70	%	of next $4 million invested
0.55	%	of next $8 million invested
0.40	%	above $16 million

1. Calculate the annual dollar fees paid by Client 1, who has $28 million under management, and Client 2, who has $87 million under management. Do not round intermediate calculations. Round your answers to the nearest dollar.

   Client 1: $

   Client 2: $

2. Calculate the fees paid by both clients as a percentage of their assets under management. Do not round intermediate calculations. Round your answers to two decimal places.

   Client 1: %

   Client 2: %

3. What is the economic rationale for a fee schedule that declines (in percentage terms) with increases in assets under management?

   Costs of management (-Select-increase/ do not increase) at the same rate as the managed assets because (-Select-positive/ negative) economies of scale exist in managing assets.