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Given a hurdle rate of 15% and a performance fee of 20%, should a hedge fund manager choose an investment (a) with a 0.4 probability
Given a hurdle rate of 15% and a performance fee of 20%, should a hedge fund manager choose an investment (a) with a 0.4 probability of a 50% profit and a 0.6 probability of a 40% loss, versus an investment (b) with a 0.75 probability of a 16% profit and a 0.25 probability of a 12% profit ?
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