The current high water mark is $66 and net asset value of a hedge fund is $62.
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Question:
Here are data on three hedge funds. Each fund charges its investors an incentive fee of 20% of total returns. Suppose initially that a fund of funds manager buys equal amounts of each of these funds and also charges its investors a 20% incentive fee. For simplicity, assume also that management fees other than incentive fees are zero for all funds.
What is the value of the incentive fee for the fund of funds if the funds of funds has a 300 initial AUM?
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