You purchased shares of a mutual fund at an offering price of $95 per share at the beginning of the year and paid a front–end load of 4.00%. If the securities in which the fund invested increased in value by 13.25% during the year, and the fund’s expense ratio was 1.50%, what is your rate of return if you sold the fund at the end of the year? Enter your answer rounded to two decimal places.
The price of a large cap equity ETF is $45 at the beginning of the year and $54 at the end of the year. If the ETF paid a $2.25 cash dividend, what is the holding period return for the year? Enter your answer rounded to two decimal places.
The current market price for ABC is $77 per share. Initial margin is 50%, maintenance margin is 35% and there is no margin interest. ABC pays annual cash dividends of $3.95 per share. You believe the stock price will decrease over the next year and wish to sell short using margin. Suppose you are correct and the stock falls to $62 per share at the end of the year. What is your percentage return on equity for this trade?
| 1 | ||
| Purchase price of Mutual Fund | $95.00 | |
| Front end load @ 4% | $3.80 | |
| Total Investment | $98.80 | |
| Sale price of fund | $107.59 | =95*(1+13.25%) |
| -Fund's Expense | -$1.43 | =-95*1.5% |
| Total Receipt at year end | $106.16 | |
| Rate of Return | ||
| =(106.16-98.8)/98.8 | ||
| 7.45% | ||
| 2 | ||
| Total Investment | $45.00 | |
| Price at the end of the year | $54.00 | |
| Dividend received | $2.25 | |
| Total Receipts | $56.25 | |
| Holding Period return | ||
| =(56.25-45) | ||
| $11.25 | ||
| Holding Period Rate of return | ||
| =(56.25-45)/45 | ||
| 25.00% | ||
| 3 | ||
| Initial Margin Investment @ 50% | $38.50 | =77/2 |
| Profit on short sell | $15.00 | =77-62 |
| -Dividend paid | -$3.95 | |
| Net Gain | $11.05 | |
| % Return on Trade | ||
| =(11.05/38.5) | ||
| 28.70% |
You purchased shares of a mutual fund at an offering price of $95 per share at...
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