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vagabundo [1.1K]
3 years ago
11

Question 9 Suppose money invested in a hedge fund earns 1% per trading day. There are 250 trading days per year. What will be yo

ur annual return on $100 invested in the fund if the manager allows you to reinvest in the fund the 1% you earn each day
Business
1 answer:
11111nata11111 [884]3 years ago
5 0

Answer:

1103.22%

Explanation:

The value of the investment at the end of the year assuming  250  trading days per year can be computed the future value formula provided below:

FV=PV*(1+daily return)^n

PV=initial investment=$100

daily return=reinvestment rate=1%

n=number of trading days in a year=250

FV=$100*(1+1%)^250

FV=$ 1,203.22

Annual return=( 1,203.22/$100)-1

Annual return=1103.22%

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Option A is the correct answer.

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