Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid–ask spreads amount to 0.4% of
1 answer:
Answer: 0.4%
Explanation:
Given that,
At every time a fund manager trades stock, then
Transaction costs = 0.4% of the value of the trade
Portfolio turnover rate = 50% ; On an average, 50% of the portfolio stock is sold and exchange with the other securities every year.
Trading costs on selling orders = 0.4%
Trading costs on buying orders = 0.4%
Therefore,
Total return of the portfolio reduced by trading costs:
= 0.4%
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Work Breakdown Structure (WBS)
Explanation:
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