Use the Following Information to Answer the Question(s)below

question 41

Multiple Choice

Use the following information to answer the question(s) below.
John Galt is a mutual fund manager at Atlas Asset Management.He can generate an alpha of 2% a year up to $500 million of invested capital.After that amount,his skills are spread too thin,so he cannot add value and his alpha is zero for all investments over $500 million.Atlas Asset Management charges a fee of 0.80% on the total amount of money under management.Assume that there are always investors looking for positive alpha investments and no investor would invest in a fund with a negative alpha.Assume that the fund is in equilibrium,meaning that no investor either takes out money or wishes to invest new money into the fund.
-The alpha that investors in Galt's fund expect to receive is closest to:

• A)-.80%.
• B)0.0%.
• C)0.80%.
• D)1.8%.

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Definitions:

Attractiveness

A subjective quality that makes something appealing or desirable to individuals.

Coercive Appeal

A strategy in advertising or persuasion that uses threats or fear of negative consequences to influence behavior or decisions.

Flattery Appeal

A persuasive technique in marketing that uses compliments or flattery to influence the behavior or opinions of the target audience.

Fear Appeal

A persuasive message that attempts to arouse fear in order to divert behavior through the threat of harm or danger.