Respuesta :
Answer:
annual return = 18.04
Explanation:
given data
fund = $200 million
S&P 500 Index = 16.5%
gross return assets = 21%
expense ratio = 2%
benchmark return = 1%
incentive bonus = 0.1 %
to find out
annual return on this fund
solution
we get here first management cost for the year that is
management cost = fund × gross return .........................1
management cost = $200 million × 1.21
management cost = $242,000,000
so net return will be
net return = gross return assets - S&P 500 Index
net return = 21% - 16.5%
net return = 4.5%
so when we add this net return to expense ratio is
= 2 % + 4.5% (0.1 )
= 2.45 %
management cost will be
management cost = $242,000,000 × 2.45 %
management cost = $5,929,000
so
annual return will be here as
annual return = [tex]\frac{242000000-5929000-200000000}{200000000}[/tex]
annual return = 0.18035
annual return = 18.04
