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9 July, 07:16

Assume that one year ago, you bought 130 shares of a mutual fund for $27 per share, you received an income distribution of $0.12 cents per share and a capital gain distribution of $0.22 cents per share during the past 12 months. Also assume the market value of the fund is now $24 a share. Calculate the percent of total return for your $3,510 investment. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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  1. 9 July, 08:31
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    Solution:

    Dollar amount of total return = Capital gain distributions + Change in market value

    First, we calculate the capital gain distributions

    Income and capital gains distribution = ($0.12 + $0.22) x 130 shares

    Income and capital gains distribution = $44.2

    Now, we calculate the change in market value

    Change in market value = Sales Price - Purchase price

    Change in market value = 130 x $24 - 130 x $27

    Change in market value = - $390

    Therefore,

    Dollar amount of total return = $44.2 + (-$390)

    Dollar amount of total return = - $345.80
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