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

question 3

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 money that Galt's fund will have under management is closest to:

• A)$500 million.
• B)$600 million.
• C)$1000 million.
• D)$1250 million.

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Definitions:

Assumption of State Debts

A financial policy where the federal government assumes the debts incurred by the states, often to standardize and stabilize the national economy.

Public Securities

Financial instruments issued by governments, such as bonds or treasury bills, to raise funds for public projects or operations.

National Government

The organization through which a nation's political authority is exercised, typically including structures such as the executive, legislative, and judicial branches.

Excise Tax

A tax imposed on specific goods, services, or activities within a country, such as alcohol, tobacco, and fuel.