Question

1)Assume that you have invested $500,000 to purchase shares in a hedge fund reporting $800

million in assets, $100 million in liabilities, and 70 million shares outstanding. Your initial lockout

period is 3 years. If the share price after 3 years increases to $15.28, what is your annualized

return over the 3-year holding period?

(A) 14.45%

(B) 15.18%

(C) 16%

(D) 17.73%

2)Consider a no-load mutual fund with $400 million in assets, 50 million in debt, and 15 million

shares at the start of the year and with $500 million in assets, 40 million in debt, and 18 million

shares at the end of the year. During the year investors have received income distributions of

$.50 per share and capital gain distributions of $.30 per share. If the total expense ratio is .75%,

what is the rate of return on the fund?

(A) 12.11%

(B) 12.95%

(C) 8.25%

(D) The answer cannot be determined from the information given

Answer 1