Five years ago, a hedge fund started with $200 million of assets under management and generated an average annual return of 30% for each of the first two years. With this outstanding performance, the hedge fund attracted $500 million in new assets at the start of year 3 and $300 million at the start of year 4 and earned 0% in years 4 and 5. Required a. What was the hedge fund's time-weighted average annual return over the five-year period? a. What average annual return did the average investor in the hedge fund actually earn over the five-year period? What is this return called?

Five years ago, a hedge fund started with $200 million of assets under management and generated an average annual return of 30% for each of the first two years. With this outstanding performance, the hedge fund attracted $500 million in new assets at the start of year 3 and $300 million at the start of year 4 and earned 0% in years 4 and 5. Required a. What was the hedge fund's time-weighted average annual return over the five-year period? a. What average annual return did the average investor in the hedge fund actually earn over the five-year period? What is this return called?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 8FPE

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