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

question 68

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) -0.80%
• B) 0.00%
• C) 0.80%
• D) 1.80%

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Definitions:

Light

A form of electromagnetic radiation that is visible to the human eye and is responsible for the sense of sight.

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A fundamental force of attraction that pulls objects toward each other, with its strength depending on the masses of the objects and the distance between them.