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2. An investment is projected to have a 0.70 probability of a 16% profit and a 0.30 probability of an 5% loss. The hedge

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2. An investment is projected to have a 0.70 probability of a 16% profit and a 0.30 probability of an 5% loss. The hedge fund has a fee structure of 2 plus 20% and there is a hurdle rate of 5%. Calculate the expected return for a. The hedge fund b. The investor [5 marks] [5 marks]

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