Chapter 4, Problem 18PS

Summary Introduction

To calculate: The rate of return on the fund when shares are sold at the end of the year.

Introduction:

Fund’s-Expense ratio: It is a ratio depicting the funds to be spent on the expenses related to the usage and maintenance of assets. For example, assume expense ratio to be 1%, then every year 1% of the total assets fund will be utilized towards expenses incurred.

Rate of return: An investor invests the money only after he/she is certain that there will be a income on that investment. When an annual income is provided to the investor and is depicted in the form of percentages or proportion of the actual investment, it is termed as rate of interest.