Consider a Hedge Fund with $250 Million in Assets at the Start

question 31

Multiple Choice

Consider a hedge fund with $250 million in assets at the start of the year.If the gross return on assets is 18% and the total expense ratio is 2.5% of the year end value,what is the rate of return on the fund?

• A) 15.05%
• B) 15.50%
• C) 17.25%
• D) 18.00%

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances for accruals and deferrals that are not recorded through regular transactions.

Accruals

Accruals are accounting adjustments for revenues and expenses that have been earned or incurred but not yet recorded in accounts due to the timing of cash flows.

Prepayments

Payments made in advance for goods or services, recorded as assets on the balance sheet until the actual goods or services are received.

Revenue Recognition

Revenue recognition is the accounting principle that outlines the specific conditions under which revenue is recognized or accounted for, typically when goods or services are delivered and the payment is assured.