2. Suppose an ETF has a NAV of $12 at t=0 and $12.10 at t=1. At t=0, the fund sells at a premium of 0.5% to NAV; at t=1, the fund sells at a discount of 0.2% to NAV. Further suppose that the ETF paid income of $1.50 per share.

a. What is the ETF return to an investor who buys at t=0 and sells at t=1?

b. Suppose the investor could have invested in the ETFs underlying portfolio directly rather than through the ETF, what would have been his return?