Question

You purchased 1,000 shares of fund ABC for $35.00 NAV per share. You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares. You just closed your account and sold 1,100 shares for $30 NAV. What was your total return on this investment?

Answer 1

B. - 5.71%

Step-by-step explanation:

Given that

Purchase price = 1000 × 35 = 35000

Selling price = 1100 × 30 = 33000

Recall that

ROI = Net profit/total investment × 100

And that

Net profit = selling price - purchase price

= 33000 - 35000

= -2000

Therefore,

ROI = -2000/35000 × 100

= - 0.05714 × 100

= - 5.71 %

Thus, total return on investment is -5.71%