Question
How does a hard hurdle commonly differ from a soft hurdle in performance-fee treatment?
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Answer
Hard fees apply above the hurdle; soft fees can apply to total return.
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Question
Why is forgetting the high-water mark a common fee-calculation error?
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Answer
Recovered losses alone do not justify a new incentive fee.
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Question
When comparing fund, co-investment, and direct investment methods, which trade-offs are most exam-relevant?
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Answer
Control, fees, diversification, and required expertise.
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Question
Why should diversification benefits of alternative investments be stated cautiously?
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Answer
Correlations often rise during stress periods.
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