Question

Consider a mutual fund with $219 million in assets at the start of the year and with 12 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $6 million. The stocks included in the fund's portfolio increase in price by 7%, but no securities are sold, and there are no capital gains distributions. The fund charges 12b-1 fees of 0.50%, which are deducted from portfolio assets at year-end.

What is the net asset value at the start and end of the year?

Answer 1

$19.43

Step-by-step explanation:

Net asset value at the end of the year = ($219,000,000 / 12,000,000 shares) * 1.07 * (1 - 0.005)

Net asset value at the end of the year = $18.25 * 1.07 * 0.995

Net asset value at the end of the year = $19.4298625

Net asset value at the end of the year = $19.43