1. Assume that one year ago you bought 160 shares of a mutual fund for $20 per s

Question

1. Assume that one year ago you bought 160 shares of a mutual fund for $20 per share, you received a capital gain distribution of $1.05 per share during the past 12 months, and the market value of the fund is now $26. Calculate the total return for this investment if you were to sell it now.

2. Assume that one year ago you bought 220 shares of a mutual fund for $19 per share, you received a capital gain distribution of $0.95 per share during the past 12 months, and the market value of the fund is now $21, Calculate the percentage of total return for your $4,180 investment.

Explanation / Answer

1. Initial investment = 160*20 = $3200

Return =( (capital gain distribution + final value of all shares)/initial investment)-1 = ((1.05*160 + 26*160)/3200)-1

=((168 + 4160)/3200) - 1 = 1.3525 - 1 = 0.3525 = 35.25%

2. Initial investment = 220*16 = $4180

Return =( (capital gain distribution + final value of all shares)/initial investment)-1 = ((0.95*220 + 21*220)/4180)-1

=((209 + 4620)/4180) - 1 = 1.1553 - 1 = 0.1553 = 15.53%

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