Answer:
The return rate on the fund is "23.75%".
Explanation:
The given values are:
In the starting of the year,
Mutual fund assets,
= $200
Share,
= 10 million
In the end of the year,
Income distribution,
= $2 per share
Capital gain distribution,
= $.25 per share
Total expense ration,
= 2%
Now,
The initial NAV will be:
= [tex]\frac{200mn}{10mn}[/tex]
= [tex]20[/tex]$
The final NAV will be:
= [tex]250-\frac{250\times 0.01}{11}[/tex]
= [tex]22.5[/tex]
hence,
The return will be:
= [tex]\frac{Change \ in \ NAV+Div+Capital \ gain \ distribution}{Initial \ NAV}[/tex]
On substituting the values, we get
= [tex]\frac{22.5-20+2+0.25}{20}[/tex]
= [tex]\frac{4.75}{20}[/tex]
= [tex]0.2375[/tex]
i.e.,
= [tex]23.75[/tex]%
