(A)
Adequate information:
Opening NAV of the fund - $ 12
Closing NAV of the fund- $ 12.10
Income distributed during the year - $ 1.50
At the beginning of the year fund is selling at 2% premium
At the end of the year fund is selling at 7% discount
To compute:i)
Introduction:
Total return to the investor in fund during a particular period is the sum total of change in the selling price (i.e. NAV after premium or discount) of the fund during the period and income distributed during the period.
(B)
Adequate information:
Opening NAV of the fund - $ 12
Closing NAV of the fund- $ 12.10
Income distributed during the year - $ 1.50
At the beginning of the year fund is selling at 2% premium
At the end of the year fund is selling at 7% discount
To compute:rate of return to investor who held securities as fund manager
Introduction:
Total return to the investor in fund during a particular period is the sum total of change in the selling price (i.e. NAV after premium or discount) of the fund during the period and income distributed during the period.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 4 Solutions
INVESTMENTS(LL)W/CONNECT
- A closed-end fund starts the year with a net asset value of $12. By year-end, NAV equals $12.10. At the beginning of the year, the fund is 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. Required: 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.) Rate of return % b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year? (Round your answer to 2 decimal places.) Rate of return %arrow_forwardA closed-end fund starts the year with a net asset value of $27. By year-end, NAV equals $28.60. At the beginning of the year, the fund is 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 $3.00.arrow_forwardA closed-end fund starts the year with a net asset value of $31. By year-end, NAV equals $33.00. At the beginning of the year, the fund is selling at a 3% premium to NAV. By the end of the year, the fund is selling at a 8% discount to NAV. The fund paid year-end distributions of income and capital gains of $3.40. Required: 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? (Round your answer to 2 decimal places.)arrow_forward
- Pleasearrow_forward$1,000 is invested in a fund at the beginning of the year. The fund rate of return is 8% for the first half of the year, and 10% for the second half. You are given the following methods of determining return, given the indicated transactions: Scenario Return Measure Midyear Transaction I Dollar-weighted $500 deposit II Dollar-weighted $500 withdrawal III Time-weighted $500 deposit IV Time-weighted $500 withdrawal Rank the rates of returns under these scenarios. A. I < II = IV < III B. II < III = IV < I C. III < I = II < IV D. IV < I = II < III E. None of these answers is correct.arrow_forward17. A closed-end fund starts the year with a net asset value of $12. By year-end, NAV equals $12.10. At the beginning of the year, the fund is 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. (LO 4-3) 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
- The New Fund had average daily assets of $2.2 billion in the past year. New Fund's expense ratio was 1.1%, and its management fee was 0.7%. Required: a. What were the total fees paid to the fund's investment managers during the year? (Enter your answer in millions rounded to 1 decimal place.) Total fees paid million b. What were the other administrative expenses? (Enter your answer in millions rounded to 1 decimal place.) Other administrative expenses millionarrow_forwardQuantAlpha fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.75%. Assume the rate of return on fund portfolio (before any taxes) is 6% per year. How much will an investment of $1000 in the fund grow to after 10 years?arrow_forwardSuppose an individual invests $40,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses (or 12b-1 fees) are 0.60 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 5 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual fund over the two-year investment period. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))) Annual return %arrow_forward
- The New Fund had average daily assets of $2.7 billion in the past year. New Fund's expense ratio was 1.6%, and its management fee was 1.4%. * Required: a. What were the total fees paid to the fund's investment managers during the year? (Enter your answer in millions rounded to 2 decimal places.) Total fees paid million b. What were the other administrative expenses? (Enter your answer in millions rounded to 2 decimal places.) Other administrative expenses millionarrow_forwardUsing a discount rate of 5.5% compounded annually, a pension fund estimates that the present value of its assets and liabilities are $7 million and $4 million, respectively. The duration of the assets is 11 years and the duration of the liabilities is 27 years. (a) Suppose that the interest rate decreases to 5.45%. Estimate the relative changes in the fund's assets and liabilities. Express yours answers as percentages, to the nearest basis point. Relative Change in Assets % Relative Change in Liabilities % (b) Using your rounded answers from (a), estimate the absolute changes in the fund's assets and liabilities. Express your answers in millions of dollars, to the nearest thousand. Absolute Change in Assets $ million Absolute Change in Liabilities s $ million (c) The fund's net worth is defined as the difference between its assets and liabilities. Using your answers from (b), estimate the relative change in the fund's net worth. Express your answer as a percent, to the nearest basis…arrow_forwardAt the beginning of the year, an investment fund was established with an initial deposit of 500 . A deposit 1000 is made at the end of each month for the first six months. Starting from theend of month 7, a withdrawal of 300 is made at the end of each month for 5 months for a total of 5 withdrawals. The amount in the fund at the end of the year is 12,500. Calculate the dollar-weighted(money-weighted) yield rate earned by the fund during the year.arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)