Consider a Hedge Fund with $200 Million at the Start

Consider a hedge fund with $200 million at the start of the year. The benchmark S&P 500 Index was up 16.5% during the same period. The gross return on assets is 21%, and the expense ratio is 2%. For each 1% above the benchmark return, the fund managers receive a .1% incentive bonus.
What was the annual return on this fund?

A) 16.5%
B) 18.04%
C) 18.55%
D) 21%

Correct Answer:

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