Answer :
Answer:
Annual Interest will be $1,103.21
Explanation:
Reinvesting on 1% per working will enable a fund manager to compound the earning to 250 trading days per year.
Use following formula to calculate the the amount investment after compounding 250 days.
F = P ( 1 + r/n )^n
n is the number of period in a year. and r/n is the interest per day which 1%.
F = 100 ( 1 + 0.01 )^250
F = $1,203.22
Return = $1,203.22 - $100 = $1,103.21
Another way:
Effective Annual rate = ( 1 + 0.01)^250 - 1
Effective Annual rate = ( 1.01)^250 - 1
Effective Annual rate = 11.0321 = 1,103.21%
F = 100 x 1103.21% = $1103.21
Answer:
Suppose money invested in a hedge fund earns 1% per trading day. There are 250 trading days per year. What will be your annual return on $100 invested in the fund if the manager allows you to reinvest in the fund the 1% you earn each day?
1203.22
Explanation:
1203.22