Question

Assume that one year ago, you bought 210 shares of a mutual fund for $20 per share and that you received an income dividend of $0.22 cents per share and a capital gain distribution of $0.30 cents per share during the past 12 months. Also assume the market value of the fund is now $23 a share. Calculate the total return for this investment if you were to sell it now.

Answer 1

17.60%

Step-by-step explanation:

The total return , in this case, can be ascertained using the holding period formula provided below:

total return=(P1-P0+dividend+capital gains)/P0

Holding period return refers to the total return earned for holding the mutual fund investment for 1 year.

P1=market value of the fund now=$23

P0=the initial cost of the fund=$20

dividend=$0.22

capital gain= $0.30

total return=($23-$20+$0.22+$0.30)/$20

total return=$3.52 /$20

total return=17.60%