Question

zippo mutual fund is one of your best performers. it just announced a year-end distribution of $2.50 per share in capital gains and $4.25 in dividends. assuming the nav increased from $31.50 to $43.75, calculate your total annual return.

Answer 1

The total annual return for the Zippo mutual fund is 58.73%, which includes capital gains, dividends, and capital gains distribution.

Step-by-step explanation:

To calculate the total annual return on the Zippo mutual fund, we need to consider both the capital gains and the dividends received during the year. The capital gains are calculated by subtracting the beginning Net Asset Value (NAV) from the ending NAV. The dividends and capital gains per share distributed are simply added to figure out the total gains per share. So, the total gain per share is the sum of the capital gain, the dividend, and the capital gains distribution.

Beginning NAV: $31.50
Ending NAV: $43.75
Capital Gain per Share: $43.75 - $31.50 = $12.25
Dividends per Share: $4.25
Capital Gains Distribution per Share: $2.50

To find the total annual return, we add the capital gain per share, the dividends per share, and the capital gains distribution per share and divide by the beginning NAV:

Total Annual Return = (($12.25 + $4.25 + $2.50) / $31.50) * 100
Total Annual Return = ($18.25 / $31.50) * 100
Total Annual Return = 58.73%