Question

Corporate Fund started the year with a net asset value of $14.00. By year-end, its NAV equaled $13.20. The fund paid year-end distributions of income and capital gains of $2.20. What was the rate of return to an investor in the fund? (Round your answer to 2 decimal places.)

Answer 1

What was the rate of return to an investor in the fund?

10%

Step-by-step explanation:

To calculate the Rate of Return it's necessary to find the variation of the Net Assets Value during the year plus the distributions of income, the result of this it's divided by the Start of Year Net Asset Value.

Rate of Return = (Var NAV + Distributions) / Start of Year NAV

Rate of Return =

($13,2 - $14,0) = -$0,80

+ Distributions = $2,2 /

Start of Year NAV = $14,0

Rate of Return = (-$0,80 + $ 2,2 ) / $14,0 = 10%