QUESTIONS 109 THROUGH 114 RELATE TO ALTERNATIVE INVESTMENTS.

114. High Plains Capital is a hedge fund with a portfolio valued at $475,000,000 at the beginning of

the year. One year later, the value of assets under management is $541,500,000. The hedge fund

charges a 1.5% management fee based on the end-of-year portfolio value, and a 10% incentive fee.

If the incentive fee and management fee are calculated independently, the effective return for a

hedge fund investor is closest to:

A. 10.89%.

B. 11.06%.

C. 12.29%.