Question

On august 31, aishwarya purchases $1,000 of the conquest european equity fund at a net asset value per unit (navpu) of $14. on december 15 of the same year, she decides to make another $1,000 purchase at a navpu of $12. on december 16, the mutual fund distributes to its unitholders $4 per unit. aishwarya's distributions are automatically reinvested back into units of the mutual fund. which of the following statements is correct?

a) aishwarya received a total distribution of $333.33 from the mutual fund.
b) after the distribution, aishwarya owns 190.47 units of the mutual fund.
c) after the distribution, aishwarya owns 206.35 units of the mutual fund.
d) after the distribution, aishwarya owns 232.14 units of the mutual fund.

Answer 1

To find out how many units Aishwarya owns after the distribution, we need to calculate the number of units she bought with each purchase, and then add the reinvested distributions to that total.

After performing the calculations, we find that Aishwarya owns 155.09 units of the mutual fund.

Step-by-step explanation:

To find out how many units Aishwarya owns after the distribution, we need to calculate the number of units she bought with each purchase, and then add the reinvested distributions to that total.

First, calculate the number of units she bought with the first purchase:

Number of units = Amount of purchase / NAVPU = $1,000 / $14 = 71.43 units (rounded to two decimal places)

Next, calculate the number of units she bought with the second purchase:

Number of units = Amount of purchase / NAVPU = $1,000 / $12 = 83.33 units (rounded to two decimal places)

Now, add the reinvested distributions to the total number of units:

Total units after distribution = 71.43 units + 83.33 units + (Total distributions / NAVPU) = 154.76 units + ($4 / $12) = 154.76 units + 0.3333 = 155.09 units (rounded to two decimal places)

Therefore, the correct statement is that after the distribution, Aishwarya owns 155.09 units of the mutual fund.