Question

. You are an investment manager who is currently managing assets worth $6 billion. You believe that active management of your fund could generate an additional one-tenth of 1% return on the portfolio. If you want to make sure your active strategy adds value, how much can you spend on security analysis?A. $12,000,000B. $6,000,000C. $3,000,000D. $0

Answer 1

Answer:

B. $6,000,000

Explanation:

Since in the question, it is given that the fund generates additional one-tenth of 1% of portfolio return

In mathematically,  

= One-tenth × rate of return × asset value

= 0.10 × 0.01 × $6,000,000,000

= $6,000,000

Here one-tenth is 0.10 and 1% is 0.01. We simply multiply the value of the asset to the given percentage