1. MassMutual Super Select Fund has 4 million shares outstanding. Its portfolio holds 200,000 shares of Stock A, 300,000 shares of Stock B, 400,000 shares of Stock C, and 600,000 shares of Stock D. The fund pays management fee $30,000 annually. The follow table shows stock price at the end of year 2020 and 2021. Year Stock 2020 2021 A $35 $38 B $40 $42 C $20 $19 D $25 $25 a) What is the Net Asset Value (NAV) at the end of 2020 and 2021? b) During 2020-2021, the fund paid income distribution $0.3/share and capital gain distribution $0.2/share. What is the return rate to fund investor from 2020 to 2021?
1. MassMutual Super Select Fund has 4 million shares outstanding. Its portfolio holds 200,000 shares of Stock A, 300,000 shares of Stock B, 400,000 shares of Stock C, and 600,000 shares of Stock D. The fund pays management fee $30,000 annually. The follow table shows stock price at the end of year 2020 and 2021. Year Stock 2020 2021 A $35 $38 B $40 $42 C $20 $19 D $25 $25 a) What is the Net Asset Value (NAV) at the end of 2020 and 2021? b) During 2020-2021, the fund paid income distribution $0.3/share and capital gain distribution $0.2/share. What is the return rate to fund investor from 2020 to 2021?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**1. MassMutual Super Select Fund Problem**
MassMutual Super Select Fund has 4 million shares outstanding. Its portfolio holds:
- 200,000 shares of Stock A
- 300,000 shares of Stock B
- 400,000 shares of Stock C
- 600,000 shares of Stock D
The fund pays a management fee of $30,000 annually. The table below shows stock prices at the end of years 2020 and 2021.
| Year | Stock A | Stock B | Stock C | Stock D |
|------|---------|---------|---------|---------|
| 2020 | $35 | $40 | $20 | $25 |
| 2021 | $38 | $42 | $19 | $25 |
**Questions:**
a) What is the Net Asset Value (NAV) at the end of 2020 and 2021?
b) During 2020-2021, the fund paid an income distribution of $0.3/share and a capital gain distribution of $0.2/share. What is the return rate to fund investors from 2020 to 2021?
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**2. T. Rowe Price Emerging Market Fund**
Investors paid $12.30 per share to start investing. If there is a front-end load of 5%, what is the Net Asset Value (NAV) of this fund?
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**3. Mutual Fund PQR**
Charges:
- Front-end load: 4%
- Operating expense: 1%
- 12b-1 fee: 0.2%
- Back-end load: 0.5%
The annual return rate from the fund (before fees) is 12%.
**Questions:**
a) What is the after-fee annual return rate to fund investors?
b) You invested $20,000 in PQR at the beginning of the year and sold all shares at the end of the year. What is your cash out balance and return rate for the year?
---
**4. Loaded-Up Fund vs. Economy Fund**
Loaded-Up Fund charges:
- 12b-1 fee: 1%
- Operating expense: 0.75%
- Front-end load: 2%
Economy Fund charges:
- Operating expense: 0.25%
The rate of return (before any fees) is 6% per year. How much will an investment
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