Question

Boomer Fund started the year with a net asset value of $14.10. By year-end, its NAV equaled $13.70. The fund paid year-end distributions of income and capital gains of $1.50. What was the rate of return to an investor in the Boomer Fund?

Answer 1

Rate of return to an investor in the Boomer Fund=7.8%

Step-by-step explanation:

Given Data:

Fund started the year with a net asset value=$14.10

Net asset value at the end of year=$13.70

Distributions of income and Capital gain=$1.50

Required:

Rate of return to an investor in the Boomer Fund=?

Solution:

Rate of return=
`(NVA_(end)-NVA_(start)+Capital\ gain\ and\ distribution)/(NVA_(start))`

`Rate\ of\ return=(\$13.70-\$14.10+\$1.50)/(\$14.10)\\ Rate\ of\ return=0.078`

Rate of return to an investor in the Boomer Fund=7.8%