Alternative Investments Q72

0. SHM Capital is a hedge fund with $200 million of initial investment capital. They charge a 3 percent management fee based on assets under management at year-end and a 15 percent incentive fee. In its first year, SHM Capital has a 28 percent return. Assume management fees are calculated using end-of-period valuation. In the second year, the fund value declines to $225 million. In the third year, the fund value increases to $250 million. If the incentive fee is calculated based on the return net of the management fee, and also includes the use of a high watermark, the geometric mean annual return over the three-year period is closest to:

Answer
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Option : C
Explanation :

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