Suppose money invested in a hedge fund earns 1% per trading day. There are 250 trading days per year. With an initial investment of $100, what will be your annual return assuming the manager puts all of your daily earnings into a zero-interest-bearing checking account and pays you everything earned at the end of the year?

[$100 * (1 + .01)^250] - $100

$100 * .01 * 250

there is no compounding of the daily return...

1st response is not applicable

To calculate the annual return, we need to find the total amount earned over the course of the year.

Since the money invested in the hedge fund earns 1% per trading day, we can calculate the amount earned per day by multiplying the initial investment by 1%:

Daily earnings = $100 * 1% = $1

Now, to determine the total amount earned over the year, we need to multiply the daily earnings by the number of trading days in a year:

Total earnings = $1 * 250 = $250

However, the question mentions that the earnings are put into a zero-interest-bearing checking account and paid at the end of the year. Therefore, the final amount received will be equal to the total earnings.

In this case, the annual return will be $250.

To summarize:
- The daily earnings are $1.
- There are 250 trading days in a year.
- The total earnings over the year will be $250.
- The final annual return will also be $250.