value: 10.00 points Fund fees and holding period return1 Consider a no-load mutu
ID: 2536271 • Letter: V
Question
value: 10.00 points Fund fees and holding period return1 Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year and with $250 million in assets and 11 million shares at the end of the year. During the year investors have recelved income distributions of $2 per share and capital gain distributions of $.55 per share. Assuming that the fund carries no debt, and that the total expense ratio is 1% of the year-end assets, what is the rate of return on the fund? ? 25.25% ? 22.44% The answer cannot be determined from the information given. ? 23.05%Explanation / Answer
A. 25.25%
NAV at the start of the year = $200 million / 10 million shares = $20
NAV at the end of the year = [$250 miillion - ($250 million * 1%)] / 11 million shares = $22.5
Rate of return = ($22.50 - $20.00 + $2.00 + $0.55) / $20.00 = 25.25%
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