Question
You invested $4,500 in a mutual fund exactly 39 months ago when the NAV of the fund was $31.80. You have not acquired or sold
You invested $4,500 in a mutual fund exactly 39 months ago when the NAV of the fund was $31.80. You have not acquired or sold any shares since that time. However, the fund paid a special distribution today of $3.00 per share. Today, the NAV is $30.84. The fund charges contingent deferred sales charges of 6%, 5%, 4%, 3%, 2%, 2%, and 1% if the shares are redeemed within the first 7 years, respectively.
Questions:
I. How much money will you receive, including the special distribution, if you redeem your shares today?
II. What is your EAR for this investment?
III. If inflation was 2.00% per year over this same period, what was your real return?
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