Question

A mutual fund had NAV per share of $19.00 on January 1, 2016. On December 31 of the same year, the fund's NAV was $19.14. Income distributions were $0.57, and the fund had capital gain distributions of $1.12. Without considering taxes and transactions costs, what rate of return did an investor receive on the fund last year

Answer 1

9.63%

Step-by-step explanation:

Calculation of Mutual Fund rate of return that the investor receive on the fund last year

Using this formula

Rate=(Fund's NAV -NAV per share +Income distributions+ Capital gain distributions )

Let plug in the formula

Where:

Fund's NAV =$19.14

NAV per share=$19.00

Income distributions=.57

Capital gain distributions =1.12

Hence

Rate =($19.14 - 19.00 + .57 + 1.12) / $19.00

=1.83/$19.00

=0.0963×100

Rate = 9.63%

Therefore without considering taxes and transactions costs, the rate of return that the investor receive on the fund last year will be 9.63%