Question: Consider a hedge fund that has an annual fee structure of 1.5 percent base management fee plus a 15 percent incentive fee applied to profits

Consider a hedge fund that has an annual fee structure of 1.5 percent base management fee plus a 15 percent incentive fee applied to profits above the risk-free rate. If the risk-free rate is 5.5 percent, compute the net percentage return for an investor if the gross return during the year is

a. 35%

b. 5%

c. -6%

Remember to show your work.

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