(a) A fund of hedge funds invests in three hedge funds with an equal weight. If the returns for the three funds are 10%, 20%, and -9%, what is the return for the fund of funds?

(b) Now lets assume there is no management fee and the hurdle rate is zero. If the incentive fee is 20%, What is the after-fee return for the fund of funds (assuming no high-water mark)?

(c) Is the incentive fee structure reasonable for this fund of hedge funds? Explain.