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

question 59

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 amount of fee income that Galt's fund will generate is closest to:

• A)$3.75 million.
• B)$8.00 million.
• C)$10.00 million.
• D)$25.00 million.

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Definitions:

Mcg

Microgram, a unit of mass equal to one millionth of a gram, often used in medicine to specify dosages of drugs and vitamins.

Microgram

A unit of mass equal to one millionth of a gram.

Milliliter

A unit of volume in the metric system, equal to one thousandth of a liter.

Discontinue

To stop using a product or halt a process or treatment, often on a permanent basis.