Suppose that a few months ago you purchased a given number of shares of a mutual

Question

Suppose that a few months ago you purchased a given number of shares of a mutual fund at the fund’s Net Asset Value (NAV) which, at that time, was $2.34. What would the yield on your investment be if you were to sell your shares today at today’s NAV? Below is this mutual fund’s relevant information as of today. Cash…………………………………………………………………………..$426,700 Accrued fees and other liabilities…………………………….. $216,900 Current market value of holdings of stocks……..…..$15,192,000 Shares outstanding…………………………………………………. 7,500,000 Current market value of holdings of bonds…………. $3,348,200

Explanation / Answer

Net Asset value of Mutual Fund Amount in $ cash 426700 Market Value of Stock 15192000 market value of Bonds 3348200 18966900 Less: Accured fee & other Liabilities 21900 NAV of Mutual Fund 18945000 Number of shares outstanding 7500000 NAV per Share of Mutual Fund (18945000/7500000 2.526 Income for holding period per share =NAV per share on Sale date - NAV per Share on Purchase Date Income for holding period per share =$2.526 - $2.34 =$0.186 yeild on Invetment = Income / Investment *100 =$0.186/$2.526   *100 =7.36%

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