Question

Assume that one year ago, you bought 130 shares of a mutual fund for $27 per share, you received an income distribution of $0.12 cents per share and a capital gain distribution of $0.22 cents per share during the past 12 months. Also assume the market value of the fund is now $24 a share. Calculate the percent of total return for your $3,510 investment. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Answer 1

Solution:

Dollar amount of total return = Capital gain distributions + Change in market value

First, we calculate the capital gain distributions

Income and capital gains distribution = ($0.12 + $0.22) x 130 shares

Income and capital gains distribution = $44.2

Now, we calculate the change in market value

Change in market value = Sales Price - Purchase price

Change in market value = 130 x $24 - 130 x $27

Change in market value = -$390

Therefore,

Dollar amount of total return = $44.2 + (-$390)

Dollar amount of total return = -$345.80