Alternative Investments Q45

45Zee Capital, a hedge fund with an initial investment capital of $200 million had a 40% return in its first year. At year-end, a 4% management fee is charged based on the assets under management and a 10% incentive fee is charged. The management fee is calculated using end-of-period valuation.
Assume that the fee structure specifies a hurdle rate of 5% and the the incentive fee is based on returns in excess of the hurdle rate. Furthermore, the performance fee is calculated net of the management fee. Which of the following is most likely to be the investor’s net return given this fee structure?

Option : C
Explanation :

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