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Ron decided to go with Bloom mutual fund. And he wants to simulate his returns had he invested in Bloom fund during the previous year.
- Ron decided to go with Bloom mutual fund. And he wants to simulate his returns had he invested in Bloom fund during the previous year. Ron was provided with the following information from Bloom regarding the previous year: Bloom started last year with a net asset value of $13 per share. And net asset value is $15 by year end. At the beginning of the year, the fund was selling at a premium of 5%, while by the end of the year the fund was selling at a 15% discount of the NAV. Bloom paid year end distributions of income and capital gains of $1.40.
- What would be Rons rate of return had he purchased blooms fund last year?
- 16%
- 3.9%
- -6.6%
- 3.66%
- Now, it is end of 2018, Ron has been investing with Bloom mutual fund for 4 years now. This morning, Ron was reviewing his investment statements and show the following information (Please ignore any fund expenses info. in solving this question)
Year | Beginning balance | Ending balance | Dividends per share | ||
No. Shares | Share price | No. Shares | Share price | ||
2015 | 20,000 | 15 | 20,000 | 16 | 0.50 |
2016 | 20,625 | 16 | 20,625 | 13.75 | 0.60 |
2017 | 21,525 | 13.75 | 21,525 | 17 | 0.632 |
2018 | 22,325 | 17 | 22,325 | 18 | 0.80 |
(please notice that the dividends received at the end of each year have been used to purchase new shares at the beginning of the following year)
- what is HPR of Ron in 2015?
- 6.67%
- 10%
- 6.25%
- 8.9%
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