I basically konw the answer but I also need explanations on why the answer is correct. If a question requires a numerical answer, provide a formula that helps to solve it.

Relationships 1. An increase in the discount paid for a closed-end investment company implies the dif- ference between the price of the shares and their NAV 2. Brokerage commissions the return on an investment in a closed-end investment company. 3. An increase in the price of a closed-end investment company the NAV. 4. An increase in tax rates the taxed owed by a REIT. 5. An increase in distributions by a REIT the trust's income and taxes owed by the recipients. 6. A return of capital distribution by a REIT the recipients' current taxes. 7. A return of capital distribution by a REIT the cost basis of the shares. 8. An increase in a REIT's ratio of debt to total assets the risk associated with the trust. 9. An increase in an index should the NAV of an ETF based on that index. Fundamental Problems with Worked Solutions 1. You purchase stock in a closed-end investment company for $25. The net asset value (NAV) of the shares is $26.50. You receive distributions of $1.00 and sell the shares for $30 when the net asset value is $31.24. What is the percentage return on your invest- ment? What role did the NAV play in determining the return? 2. You purchase 100 shares of stock in a real estate investment trust (REIT) for $46 (54,600). You receive distributions of $2.00 a share consisting of $0.70 in ordinary income, $0.30 in long-term capital gains, and $1.00 in return of capital. a) If you sell the shares for $50, what is the percentage return on your investment? b) If you are in the 25 percent income tax bracket and pay 15 percent on long-term capital gains, what are the taxes owed on the distributions? c) If you sell the shares for a long-term capital gain, what is the tax owed on the gain