1. An investor purchases a mutual fund share for $100. The fund pays dividends o
ID: 2786096 • Letter: 1
Question
1. An investor purchases a mutual fund share for $100. The fund pays dividends of $4, distributes a capital gain of $5, and charges a fee of $3 when the fund is sold one year later for $114. What is the net rate of return from this investment?
2. An investor purchases a mutual fund for $60. The fund pays dividends of $.50, distributes a capital gain of $2, and charges a fee of $2 when the fund is sold one year later for $68.50. What is the net rate of return from this investment?
1. An investor purchases a mutual fund share for $100. The fund pays dividends of $4, distributes a capital gain of $5, and charges a fee of $3 when the fund is sold one year later for $114. What is the net rate of return from this investment?
2. An investor purchases a mutual fund for $60. The fund pays dividends of $.50, distributes a capital gain of $2, and charges a fee of $2 when the fund is sold one year later for $68.50. What is the net rate of return from this investment?
Explanation / Answer
1)
Net rate of return from this investment:
= ($114+$4+$5-$3-$100)/$100
= $20/$100
= 20%
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