Alternative Investments Q47

47Cole Hedge Funds had an invested capital of $100 million. It earned a return of 25% in the first year. Given that it follows a 4 and 20 fee structure, and calculates the incentive and management fees independently, the net return for the investors is closest to:

Option : B
Explanation : Management fee = 100 * 1.25 * 0.04 = 5 million,
Incentive fee = (100 * 1.25 - 100) * 0.2 = 5
Return = (100 * 1.25 - 100 - 10) / 100 = 15%

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