You are given the following information for a hedge fund. Based on the available information, please calculate the return for each year and also decide the high watermark and whether an incentive fee will be paid to managers in each year. Assume there is no management fee. For incentive fee, you can put Yes if it will be paid or No if it will not be paid to managers. Please show full workings in the space below.

(6 marks)

	Year 1	Year 2	Year 3	Year 4
Initial Value	500000	575000	460000	575000
Ending Value	575000	460000	570000	650000
Return
High Watermark (for next year)
Hurdle rate	10%	10%	10%	10%
Will incentive fee be paid?