Management Fee of Investment Management Firm - CFA Level 1 Exam - Test Prep

Management Fee Ranges

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Question

The management fee of an investment management firm typically ranges from ________.

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Explanations

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A. B. C. D.

C

The management fee of an investment management firm typically ranges from one-quarter to one-half percent of the total value of the fund, with a sliding scale as the size of the fund increases.

The management fee is a fee charged by an investment management firm for managing a fund or portfolio on behalf of investors. It is typically expressed as a percentage of the total value of the fund.

Let's analyze the answer choices:

A. One to two percent of the total value of the fund: This option suggests that the management fee ranges from one to two percent of the total value of the fund. This range is commonly seen in the investment industry and represents a typical management fee structure.

B. None of these answers: This option implies that none of the provided answers accurately represents the range of management fees for an investment management firm.

C. One-quarter to one-half percent of the total value of the fund: This option suggests a narrower range, from one-quarter to one-half percent of the total value of the fund. While it is possible for some investment management firms to charge fees within this range, it is generally lower than the typical fee range.

D. One-half to one percent of the total value of the fund: This option implies a narrower range, from one-half to one percent of the total value of the fund. Similar to option C, this range is generally lower than the typical fee range charged by investment management firms.

Considering the options provided, option A, "one to two percent of the total value of the fund," is the most accurate answer. It represents the common range for management fees charged by investment management firms.