A hedge fund charging 1.5% management fee and 10% of return above T-bills, earned 35% in a given yesr. What’s the investor’s return if T-bills rate was 3%?
32.2%
30%
nope.
30.3%
31.3% think i made a mistake the 1st time … (.35-.03)*.9 --> +.03 —> *.985
thats right 30.3
dreary whats the answer
the 1.5% is shaved off the assets held, while the 10% is off of teh actual return, so it is 30.3%
35 - 3.2 - 1.5 = 30.3
I wish i was earning a 30.3% return
how do you get 3.2?
return :35 risk free:3 over risk free = 35-3=32 % taken of all returns over the risk free rate: 10%; 10%*32%=3.2% 35%-3.2%-1.5%=30.3%
got it, thank you map1