A year ago, the Really Big Growth Fund was being quoted at an NAV of $22.28 and an offer price of $23.45. Today, it's being quoted at $24.67 (NAV) and $25.97 (offer). What is the holding period return on this load fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled $1.09 per share? Assume that none of the dividends and capital gains distributions are reinvested into the fund.

Question

Jazmine Kennedy

Business

4 July, 01:59

A year ago, the Really Big Growth Fund was being quoted at an NAV of $22.28 and an offer price of $23.45. Today, it's being quoted at $24.67 (NAV) and $25.97 (offer). What is the holding period return on this load fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled $1.09 per share? Assume that none of the dividends and capital gains distributions are reinvested into the fund.

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Answers (1)

Know the Answer?

Ashley Thomas · Answer 1

9.85%

Explanation:

Data provided in the question:

Initial Offer price = $23.45

Current NAV = $22.28

Dividends and capital gains distributions over the year = $1.09 per share

Now,

Holding period return

= [Current NAV + Dividends and capital gains distributions - Initial Offer price ] : Initial Offer price

= [ $24.67 + $1.09 - $23.45 ] : $23.45

= $2.31 : $23.45

= 0.0985

or

= 0.0985 * 100%

= 9.85%