PFIN 7:STUDENT EDITION-TEXT
7th Edition
ISBN: 9780357033616
Author: Billingsley
Publisher: CENGAGE L
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Chapter 13, Problem 8FPE
Summary Introduction
To calculate: The
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A year ago, the Very Large Growth Fund was being quoted at an NAV of $20.86 and an offer price of $21.73. Today, it's being quoted at $22.53 (NAV) and $23.47 (offer). What is the holding
period return on this load fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled $0.96 per share? Assume that none of the
dividends and capital gains distributions are reinvested into the fund. (Hint: You, as an investor, buy fund shares at the offer price and sell at the NAV.)
Corporate Fund started the year with
a net asset value of $17.80. By year -
end, its NAV equaled $16.30. The
fund paid year - end distributions of
income and capital gains of $2.20.
What was the (pretax) rate of return
to an investor in the fund?
A year ago, the Very Large Growth Fund was being quoted at an NAV of $21.18and an offer price of $22.53.Today, it's being quoted at $23.39 (NAV) and $24.88 (offer). What is the holding period return on this load fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled $0.97 per share? Assume that none of the dividends and capital gains distributions are reinvested into the fund. (Hint:You, as an investor, buy fund shares at the offer price and sell at the NAV.)
Chapter 13 Solutions
PFIN 7:STUDENT EDITION-TEXT
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- 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 (pretax) rate of return to an investor in the fund?arrow_forwardYou pay $21,600 to the Laramie Fund, which has an NAV of $18 per share at the beginning of the year. The fund deducted a front-end load of 4% at the time of the purchase. The securities in the fund then increased in value by 10% during the year. The fund's expense ratio is 1.3% and is deducted from year-end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? Select the answer closest to the correct return. (Hint: The formula on slide #23 in the "Mutual Funds, ETFs, ..." slide set solves for the gross return. Your rate of return would be the gross return minus 1. The formula on slide # 23 can be written as X(1-f)(1+r-a)" (1-b) Gross Return = (1 - f)(1+r-a)" (1-b) or as Gross Return = X where X is the dollar amount invested. The other variables in the formula (f, r, a, n, b) are all defined in the slide set and in the lecture.) 4.2% 10% 8.7% O 4.7%arrow_forwardAssume that one year ago, you bought 240 shares of a mutual fund for $27 per share and that you received an income dividend of $0.34 cents per share and a capital gain distribution of $1.07 per share during the past 12 months. Also assume the market value of the fund is now $29.50 a share. Calculate the total return for this investment if you were to sell it now. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.arrow_forward
- About a year ago, Eric Robertson bought some shares in the Diamond Mountain Mutual Fund. He bought the fund at $25.50 a share, and it now trades at $26.30. Last year, the fund paid dividends of $0.72 a share and had capital gains distributions of $2.50 a share. Assume that the mutual fund distributed the dividends and capital gains at the end of the year. Using the approximate yield formula, what rate of return did Eric earn on his investment? Round the answer to two decimal places. % Repeat the calculation using a handheld financial calculator. Round the answer to two decimal places. % What rate of return would he have earned if the stock had risen to $30 a share? Round the answer to two decimal places. %arrow_forwardRACE Mutual fund is a no-load fund that had a net asset value of $25.60 1 year ago. Today, the net asset value (NAV) is $28.83. During the year, dividends of $0.72 were paid out, and a capital gain distribution of $0.65 was made. Calculate the approximate yield for RACE. (Show all work.)arrow_forwardSuppose that at the beginning of 2004 you invested $l0,000 in the Stivers mutual fund and $5000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided in the table below. Which mutual fund performed better? Year Stivers Trippi 2004 11,000 5,600 2005 12,000 6,300 2006 13,000 6,900 2007 14,000 7,600 2008 15,000 8,500 2009 16,000 9,200 2010 17,000 9,900 2011 18,000 10,600arrow_forward
- 20)Corporate fund started the year with a net asset value of GHS12.25. By year-end, its NAV equaled GHS12.10. The fund paid year-end distributions of income and capital gains of GHS1.50. What was the (pretax) rate of return to an investor in the fund?arrow_forwardA closed-end fund starts the year with a net asset value of $12.00. By year-end, NAV equals $12.70. At the beginning of the year, the fund was selling at a 4% premium to NAV. By the end of the year, the fund is selling at a 4% discount from NAV. The fund paid year-end distributions of income and capital gains of $1.30. a. What is the rate of return to an investor in the fund during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forwardA closed-end fund starts the year with a net asset value of OMR10. By year end, NAV equals OMR10.10. At the beginning of the year, the fund was selling at a 3% premium to NAV. By the end of the year, the fund is selling at a 6% discount to NAV. The fund paid year end distributions of income and capital gains of OMR2.50. What is the rate of return to an investor in the fund during the year?arrow_forward
- Suppose that at the beginning of Year 1 you invested $10,000 in the Stivers mutual fund and $5,000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided in the table below. Mean annual return (to 3 decimals) % Year Year 1 $10,700 Year 2 $11,900 Year 3 $12,900 Year 4 $13,900 Year 5 $15,000 Year 6 $16,000 Year 7 $17,100 Year 8 $18,100 Compute the mean annual return for the Stivers mutual fund and for the Trippi mutual fund. Do not round intermediate calculations. Stivers Trippi % Stivers Trippi $5,600 $6,400 $7,000 $7,600 $8,600 $9,300 $9,900 $10,700arrow_forwardCorporate 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. Required: What was the rate of return to an investor in the fund? (Round your answer to 2 decimal places.) Rate of return %arrow_forwardA closed-end fund starts the year with a net asset value of $12.00. By year-end, NAV equals $12.10. At the beginning of the year, the fund was selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 7% discount to NAV. The fund paid year-end distributions of income and capital gains of $1.50.a. What is the rate of return to an investor in the fund during the year?b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year?arrow_forward
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