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12 September, 03:58

Corporate Fund started the year with a net asset value of $12.50. By year-end, its NAV equaled $12.10. The fund paid year-end distributions of income and capital gains of $1.50. What was the rate of return to an investor in the fund?

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  1. 12 September, 05:13
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    The rate of return to an investor in the fund is 8.80%.

    Explanation:

    Rate of return = [change in net asset value + distribution of income and capital gain] / (net asset value when the year started)

    = [ ($12.10 - $12.50) + ($1.50) ] / ($12.50)

    = [-$0.4 + $1.50] / ($12.50)

    = 0.088

    = 8.80%

    Therefore, the rate of return to an investor in the fund is 8.80%.
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