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8 November, 09:25

A mutual fund had NAV per share of $19.00 on January 1, 2016. On December 31 of the same year, the fund's NAV was $19.14. Income distributions were $0.57, and the fund had capital gain distributions of $1.12. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year

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  1. 8 November, 10:55
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    9.63%

    Explanation:

    Calculation of Mutual Fund rate of return that the investor receive on the fund last year

    Using this formula

    Rate = (Fund's NAV - NAV per share + Income distributions + Capital gain distributions)

    Let plug in the formula

    Where:

    Fund's NAV = $19.14

    NAV per share=$19.00

    Income distributions=.57

    Capital gain distributions = 1.12

    Hence

    Rate = ($19.14 - 19.00 +.57 + 1.12) / $19.00

    =1.83/$19.00

    =0.0963*100

    Rate = 9.63%

    Therefore without considering taxes and transactions costs, the rate of return that the investor receive on the fund last year will be 9.63%
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