Forward / spot –

The forward rate and spot rate are different prices, or quotes, for different contracts. The forward
rate is the settlement price of a forward contract, while the spot rate is the settlement price of a
spot contract.

A spot contract is a contract that involves the purchase or sale of a commodity, security, or currency
for immediate delivery and payment on the spot date, which is normally two business days after the
trade date. The spot rate, or spot price, is the current price of the asset quoted for the immediate
settlement of the spot contract. For example, say it's the month of August and a wholesale company
wanted immediate delivery of orange juice, it will pay the spot price to the seller and have orange
juice delivered within 2 days. However, if the company needs orange juice to be available at its
stores in late December, but believes the commodity will be more expensive during this winter
period due to a higher demand than supply, it cannot make a spot purchase for this commodity since
the risk of spoilage is high. Since the commodity wouldn't be needed until December, a forward
contract is a better fit for the investment.

Unlike a spot contract, a forward contract is a contract that involves an agreement of contract terms
on the current date with the delivery and payment at a specified future date. Contrary to a spot rate,
a forward rate is used to quote a financial transaction that takes place on a future date and is the
settlement price of a forward contract. However, depending on the security being traded, the
forward rate can be calculated using the spot rate.

For example, say a Chinese electronic manufacturer has a large order to be shipped to America in
one year. The Chinese manufacturer engages in a currency forward and sells $20 million in exchange
for Chinese yuan at a forward rate of $0.80 per Chinese yuan. Therefore, the Chinese electronic
manufacturer is obligated to deliver 20 million dollars at the specified rate on the specified date, six
months from the current date, regardless of fluctuating currency spot rates.

Expense – accrual should be same as client budget

Work profile -

Budgeting – expense , new class , fund

Inverse payment –

Expense –

UNREALISED GAIN AND LOSS IMPACT O NAV

Hurdle rate versus high water mark: What the difference?

Hurdle Rate –
In hedge funds, the hurdle rate refers to the rate of return that the fund manager must beat before
collecting incentive fees.

Hurdle rate and high water mark are two types of benchmarks that hedge funds can set as
requirements for collecting incentive or performance fees from investors.

A high water mark is the highest value that investments fund or account has ever reached. A hurdle
rate is the minimum amount of profit or returns a hedge fund must earn before it can charge an
incentive fee.

For instance, a fund might set up a 5% hurdle rate, allowing it to collect incentive fees only during
periods when returns are higher than this amount. If the same fund also has a high water mark, it
cannot collect an incentive fee unless the fund's value is above the high water mark and returns are
above the hurdle rate.

Hedge funds commonly charge management fees of 1% to 2% of a fund's net asset value (NAV) and

incentive fees of 20% of the fund's profits.

What is the difference between fund of funds and hedge funds?

There are many defination about FOF and HF on internet library but here I give my own
understanding and hope it can help you.

The basic difference is that FOF is typical a fund investing other funds while the HF is one of the
other funds. From another perspective, HF is a fund directly investing financial products like stocks,
bonds and commodities, etc. The FOF, however, is indirectly doing that because it makes investment
through other funds. Maybe I can use a example of buying house to explain more. If you bought a
house by contacting the household of the house directly by yourself, it is the way like HF. But if you
bought the same house through an agent paid by commission, it is the way like FOF.

What is crystallisation?