Use the information in the following table to answer the question. Note the fund started with 100 Net Asset Value

at the start of 2012. 2012 2013 2014 2015 2016 2017 2018 2019

Return 7.7% 10.4% 21.9% -2.2% 24.8% -20.5% 12.8% 7.7%

Asset Value 107.67 118.83 144.83 141.67 176.83 140.50 158.50 170.67

1)Given the above hedge fund managers performance, which year(s) would the manager get paid on their high watermark?

2)Calculate the rolling 3 years' average returns and identify which year(s) the managers get paid the high watermark?

3) Explain why managers are paid the high water mark during the years identified above