Suppose money invested in a hedge fund earns 1% per trading day

Finance Sep 04, 2020

Suppose money invested in a hedge fund earns 1% per trading day. There are 250 trading days per year. What will be your annual return on $100 invested in the fund if the manager allows you to reinvest in the fund the 1% you earn each day?

Expert Solution

Computation of the future value:-

FV = PV*(1+rate)^n

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

= $100 * 12.0322

= $1,203.22

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