Consider a mutual fund with $218 million in assets at the start of the year and with 10 million shares outstanding. The fund invests in aportfolio of stocks that provides dividend income at the end of the year of $4 million. The stocks included in the fund's portfolioincrease in price by 8%, but no securities are sold, and there are no capital gains distributions. The fund charges 12b-1 fees of 1.00%,which are deducted from portfolio assets at year-end.Required:a. What is the net asset value at the start and end of the year? (Enter your answers in dollars rounded to 3 decimal places.)× Answer is complete but not entirely correct.Net AssetValueStart of the year$End of the year$6921.800Per share23.705 x Per shareb. What is the rate of return for an investor in the fund? (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)× Answer is complete but not entirely correct.Rate of10.57 %return

Part (a): Net Asset Value (NAV) Given data:- Assets at the start of the year = $218 million- Number…

Answered: Consider a mutual fund with $218…

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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Required: A hedge fund with $0.7 billion of assets charges a management fee of 3% and an incentive fee of 20% of returns over a money market rate, which currently is 6%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of: (Enter your answers in millions rounded to 1 decimal place.) Required: A hedge fund with $0.7 billion of assets charges a management fee of 3% and an incentive fee of 20% of retums over a money market rate, which currently is 6%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of: (Enter your answers in millions rounded to 1 decimal place.) Required: A hedge fund with $0.7 billion of assets charges a management fee of 3% and an incentive fee of 20% of returns over a money market rate, which currently is 6%. Calculate total fees, both in dollars and as a percent of assets under management, for portfolio returns of: (Enter your answers in millions rounded to…
Suppose you are the money manager of a $4.82 millioninvestment fund. The fund consists of four stocks with the following investments and betas:Stock Investment BetaA $ 460,000 1.50B 500,000 (0.50)C 1,260,000 1.25D 2,600,000 0.75 If the market’s required rate of return is 8% and the risk-free rate is 4%, what is the fund’srequired rate of return?8-8 BETA COEFFICIENT Given t
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You invested in the no-load Best Mutual Fund one year ago by purchasing 900 shares of the fund at the net asset value of $18.58 per share. The fund distributed dividends of $1.95 and capital gains of $1.98. Today, the NAV is $19.90. If Best was a load fund with a 3% front-end load, what would be the HPR?
Suppose that at the start of the year, no-load mutual fund has a net asset value of $27.65 per share. During the year, it pays its shareholders a capital gain and dividend distribution of $1.18 per share and finishes the year with an NAV of $30.84. a. What is the return to an investor who holds 257.616 shares of this fund in his (nontaxable) retirement account? Do not round intermediate calculations. Round your answer to two decimal places. % b. What is the after-tax return for the same investor these shares were held in an ordinary savings account? Assume that the investor is in the 30% tax bracket, Do not round intermediate calculations. Round your answer to two decimal places. % c. If the investment company allowed the investor to automatically reinvest his cash distribution in additional fund shares, how many additional shares could the investor acquire? Assume that the distribution occurred at year end and that the proceeds from the distribution can be reinvested at the year-end…
The Investments Fund sells Class A shares with a front-end load of 6% and Class B shares with 12b-1 fees of 5% annually as well as back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume the portfolio rate of return net of operating expenses is 10% annually. If you plan to sell the fund after four years, are Class A or Class B shares the better choice for you? What if you plan to sell after 15 years?
. The investment fund sells class A share with a front –end load of 6% and class B shares with 12b-1 fees of .5% annually as well as back –end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio ( until the fifth year). Assume the portfolio rate of return net of operating expenses is 10% annually. ( LO 4-5) If you plan to sell the fund after four years, are Class A or Class B shares the better choice for you? What if you plan to sell after 15 years?
1)The twenty-first century closed-end fund has GHS350 million in securities, GHS8 million in liabilities and 20 million in shares outstanding. It trades at a 10% discount from net asset value (NAV) a)What is the net asset value of the fund? b)What is the current price of the fund? c)Suggest two reasons why the fund may be trading at a discount from net asset value. 2)The new pioneer closed-fund has GHS520 million in securities, GHS5 in liabilities, and 10 million shares outstanding. It trades at a 5% premium above its net asset value (NAV). a)What is the net asset value of the fund? b)What is the current price of the fund? c)Why might a fund trade at a premium above its net asset value? 3)In problem 2, if new pioneer converted to an open-end fund trading at its net asset value with a 6% load (commission), what would its purchase price be? 4)In problem 2, if new pioneer converted to an open end fund and traded at GHS1.50, would it be a load or no load fund? 5)An…
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A mutual fund with K100 million in assets at the start of the year and with 10 million shares outstanding invests in a portfolio of stocks that provides no income but increases in value by 10 %.Required:(i) What is the rate of return in the fund?

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