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Round to 4 decimal places please!! Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid-ask spreads amount to
Round to 4 decimal places please!!
Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid-ask spreads amount to 1.4% of the value of the trade. If the portfolio turnover rate is 50%, by how much is the total return of the portfolio reduced by trading costs? Hint: If the turnover rate is 50%, this means that, on average, 50% of the portfolio is sold and replaced with other securities each year. (Do not round intermediate calculations. Enter your answer as a decimal rounded to four decimal places.) Total return reduced by trading costs Step by Step Solution
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