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an investor purchases a mutual fund for $50. the fund pays dividends of $.50, distributes a capital gain of $1, and charges a fee of $1 when the fund is sold one year later for $50.50. what is the net rate of return from this investment?

Respuesta :

Given:

  • mutual fund purchased for $50
  • fund pays dividends of $.50
  • distributes a capital gain of $1
  • charges a fee of $1
  • the fund is sold one year later for $50.50

We need to calculate the net rate of return from this investment. It can be calculated in the following manner.

The net gain or loss of an investment over a given time period stated as a percentage of the investment's starting cost is known as a rate of return (RoR).

ROI= (Cost of Investment/ Net Return on Investment)  ×100%

      = (50.5/ 50.5) ×100%

      = 100%

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