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

question 20

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) 15.5%
• C) 17.25%
• D) 18%

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Definitions:

Initial Cash Balance

The amount of cash available in a company or individual's account at the start of a period.

Optimum

The most favorable condition or level for growth, reproduction, or success.

Holding Cash

The act of retaining liquid currency or cash equivalents by individuals or firms as a part of their financial strategy, to cover expenses or for speculative purposes.

Interest Rate

The percentage charged or paid for the use of money on a loan or investment, typically expressed as an annual percentage rate (APR).