contestada

Corporate Fund started the year with a net asset value (NAV) 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?

Respuesta :

zainsubhani

Answer:

The rate of return to an investor in the fund=0.088*100=8.80%

Explanation:

Given Data:

NVA at the start of the year=[tex](NAV)_o[/tex]=$12.50

NVA at the end of the year=[tex](NAV)_f[/tex]$12.10

Distributions of income and capital gains =$1.50

Required:

The rate of return to an investor in the fund=?

Solution:

Rate of return=[tex]\frac{(NAV)_f+\ Distributions}{(NAV)_o}-1[/tex]

[tex]Rate\ of\ return=\frac{12.10+1.50}{12.50}-1 \\Rate\ of\ return=0.088[/tex]

The rate of return to an investor in the fund=0.088*100=8.80%