Question

A year​ ago, the Really Big Growth Fund was being quoted at an NAV of ​$22.28 and an offer price of ​$23.45. ​Today, it's being quoted at ​$24.67 ​(NAV) and ​$25.97 ​(offer). What is the holding period return on this load​ fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled ​$1.09 per​ share? Assume that none of the dividends and capital gains distributions are reinvested into the fund.

Answer 1

Answer:

9.85%

Explanation:

Data provided in the question:

Initial Offer price = ​$23.45

Current NAV = ​$22.28

Dividends and capital gains distributions over the year  = $1.09 per​ share

Now,

Holding period return

= [Current NAV + Dividends and capital gains distributions - Initial Offer price ] ÷ Initial Offer price

= [ $24.67 + $1.09 - $23.45 ] ÷ $23.45

= $2.31 ÷ $23.45

= 0.0985

or

= 0.0985 × 100%

= 9.85%