GEN COMBO LOOSELEAF INVESTMENTS; CONNECT ACCESS CARD
11th Edition
ISBN: 9781260201550
Author: Bodie
Publisher: MCG
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Chapter 4, Problem 17PS
Summary Introduction
To calculate: The total fees paid to the fund’s investment managers during the year, where New Fund’s expense ratio was 1.1% and management fee was 7%, and to calculate the administrative expenses.
Introduction:Investment manager is the manager who handles investment portfolios and administrative expenses are expenses which are acquired by the firm.
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Students have asked these similar questions
A fund starts the year with NAV 54 per share. Over the year, the fund pays out income of 3.25 per
share and capital gains distributions of 3.75 per share. Assets in the portfolio grew (shrank) by 0.01,
and an expense ratio of 0.016 is charged at the end of the year.
What is the rate of return on the fund? (Hint: calculate NAV1 first)
O 0.0953
O 0.1110
O 0.1169
O 0.1055
0.1235
Simple interest of i = 4% is being credited to a fund. In which period, n, is this equivalent to an effective rate of 2.5%?
The total cash count minus the amount of the Change Fund should be equal to:
a.the total current liabilities.
b.the expenses incurred.
c.the income earned.
d.the total revenue earned.
Chapter 4 Solutions
GEN COMBO LOOSELEAF INVESTMENTS; CONNECT ACCESS CARD
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- One of the following sentences is true regarding the money weighted rate of return and the time weighted rate of return. Select one: O a. TWRR require that the precise times of all cash flows of new money into and out of the fund over the period are known. O b. TWRR depends upon particular subdivisions of the period. C. MWRR depends upon any particular subdivision of the entire period and generally gives greater weight to the yields pertaining to the times when the fund is more constant. d. Both measures have to yield the same result.arrow_forwardWhat is an “equivalent annual annuity (EAA)”? When and how are EAAs used in capital budgeting?arrow_forwardGadubhaiarrow_forward
- The accounting rate of return (also known as the unadjusted rate of return) can be calculated as: (See your Chapter 25 notes, page 2) Initial cost of the investment divided by the annual net cash inflow Initial cost of the investment minus the annual net cash inflow Average amount of the investment divided by the average annual net income Average annual net income divided by the average amount of the investment Present value of net cash inflow divided by the initial cost of the investment Annual net cash inflow minus the initial cost of the investment Future value of net cash inflow divided by the initial cost of the investment Present value of the net cash inflow minus the initial cost of the investmentarrow_forwardIn year 1, a fund increases from $179mm to $186mm (gross asset value). The fund has a 3/15 structure with a hurdle rate of 8%. How much are the performance fees for this year, assuming they are charged after management fees are first deducted from the gross asset value? 4 $1.935mm There are no performance fees for this year $0.065mm $0.1217mmarrow_forward3. follows: Carnegie Corp. projects an annual cash flow for one of its divisions as Year 0 1 2 3 4 5 6 Cash flow (SM) 3 0 -10 2 2 2 2 What is the IRR for this cash flow stream? Try plotting the NPV as a function of the discount rate. Are there any problems with using IRR for this application?arrow_forward
- A project has the following cash flows set out below. What is the profitability index of this project if the relevant discount rate is 2 percent? Enter your final answer to two decimal places. Year Cash flow 0 -1,745 1 537 2 2,066 3 3,912arrow_forwardMcCann Company has identified an investment project with the following cash flows. a. If the discount rate is 11 percent, what is the present value of these cash flows? b. What is the present value at 18 percent? c. What is the present value at 29 percent?arrow_forwardWhen an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) When an investment’s annual net cash inflows are equal every year, the investment’s payback period can be calculated as: (See your Chapter 25 notes, page 2) Initial cost of the investment minus the annual net cash inflow Average amount of the investment divided by the average annual net income Initial cost of the investment divided by the annual net cash inflow Present value of net cash inflow divided by the initial cost of the investment Future value of net cash inflow divided by the initial cost of the investment Present value of the net cash inflow minus the initial cost of the investment Annual net cash inflow minus the initial cost of the investment Average annual net income divided by the average amount of the investmentarrow_forward
- Suppose that you initially invested 10,000 in the Stivers mutual fund and 5,000 in the Trippi mutual fund. The value of each investment at the end of each subsequent year is provided in the table: Which of the two mutual funds performed better over this time period?arrow_forwardRequired: A number of terms and concepts from this chapter and a list of descriptions, definitions, and explanations appear below. For each term listed below (1 to 9), choose at least one corresponding item (a to k). Note that's single term may have more than one description, and a single description may be used more than once or not at all. A. Discounted cash flow method of capital budgeting. B. Estimate of the average annual return on investment that a project will generate. C. Capital budgeting method that identifies the discount rate that generates a zero net present value. D. Decision that requires managers to evaluate potential capital investments to determine whether they meet a minimum criterion, E, Only capital budgeting method based on net income instead of cash flow. F. Ratio of the present value of future cash flows to the initial investment. G. Value that a cash flow that happens today will be worth at some point in the future. H. Concept recognizing that cash received…arrow_forwardQuestion: Which of the following methods of capital budgeting accounts for the time value of money? Options: A) Net Present Value (NPV) B) Payback Period C) Accounting Rate of Return (ARR) D) Profitability Index (PI)arrow_forward
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