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Corporate Fund started the year with a net asset value of $14.50. By year-end, its NAV equaled $14.00. The fund paid year-end distributions of income and capital gains of $1.00. What was the (pretax) rate of return to an investor in the fund? (Round your answer to 2 decimal places.)

Respuesta :

Answer:

3.45%  (Approx)

Explanation:

Given:

NAV at ending = $14

NAV at starting = $14.50

Capital gain = $1

Computation of net rate of return :

Rate of Return = [(NAV at ending - NAV at starting + Capital gain) / ( NAV at starting)] × 100

= [($14 - $14.50 + $1) / ($14.5)] × 100

= [$0.50 / $14.5] × 100

= [0.0344827586]  × 100

= 3.44827586%

= 3.45%  (Approx)

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