One year ago, the T. Rowe Price Australian Equity Closed-End Fund had an NAV of A$10.40 and was selling at an 18% discount. Today, its NAV is A$11.69, and it is priced at a 4% premium. During the year, T. Rowe paid dividends of A$0.40 and had a capital gains distribution of A$0.95. On the basis of this information, calculate each the following:
a. T. Rowe’s NAV-based holding period return for the year.
b. T. Rowe’s market-based holding period return for the year. Did the market premium/ discount hurt or add value to the investor’s return? Explain.
c. Repeat the market-based holding period return calculation, except this time assume the fund started the year at an 18% premium and ended it at a 4% discount. (Assume the beginning and ending NAVs remain at A$10.40 and A$11.69, respectively.) Is there any change in this measure of return? Why?