Question

1. Assume that one year ago, you bought 120 shares of a mutual fund for $25 per share and that you received an income dividend of $0.25 cents per share and a capital gain distribution of $0.34 cents per share during the past 12 months. Also assume the market value of the fund is now $31 a share. Calculate the total return for this investment if you were to sell it now.

2. Assume that one year ago, you bought 170 shares of a mutual fund for $28 per share and that you received an income dividend of $0.14 cents per share and a capital gain distribution of $0.28 cents per share during the past 12 months. Also assume the market value of the fund is now $31 a share. Calculate the percentage of total return for your $4,760 investment.

Answer #1

Answer 1 | ||||||

Units | Amount per share | Total | ||||

Net Investment | 120 | 25 | 3000 | |||

Sale Value | 120 | 31 | 3720 | |||

Profit on sale | 720 | |||||

Profit of Dividend | 120 | 0.25 | 30 | |||

Profit of CG Distribution | 120 | 0.34 | 40.8 | |||

TOTAL PROFIT | 790.8 | |||||

Total Return for this investment | 790.8 | |||||

Answer 2 | ||||||

Units | Amount per share | Total | ||||

Net Investment | 170 | 28 | 4760 | |||

Sale Value | 170 | 31 | 5270 | |||

Profit on sale | 510 | |||||

Profit of Dividend | 170 | 0.14 | 23.8 | |||

Profit of CG Distribution | 170 | 0.28 | 47.6 | |||

TOTAL PROFIT | 581.4 | |||||

Total Return for this investment | 581.4 | |||||

% of total return | 581.4 / 4760 | 12.21% | ||||

Assume that one year ago, you bought 320 shares of a mutual fund
for $22 per share and that you received an income dividend of $0.17
cents per share and a capital gain distribution of $0.22 cents per
share during the past 12 months. Also assume the market value of
the fund is now $24 a share. Calculate the total return for this
investment if you were to sell it now.
(Do not round intermediate calculations. Round your
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Chapter 13
Financial Planning Exercise 9
Calculating approximate yield on mutual fund
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