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14 September, 15:14

A year ago, the Really Big Growth Fund was being quoted at an NAV of $22.28 and an offer price of $23.45. Today, it's being quoted at $24.67 (NAV) and $25.97 (offer). What is the holding period return on this load fund, given that it was purchased a year ago and that its dividends and capital gains distributions over the year have totaled $1.09 per share? Assume that none of the dividends and capital gains distributions are reinvested into the fund.

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  1. 14 September, 17:22
    0
    9.85%

    Explanation:

    Data provided in the question:

    Initial Offer price = $23.45

    Current NAV = $22.28

    Dividends and capital gains distributions over the year = $1.09 per share

    Now,

    Holding period return

    = [Current NAV + Dividends and capital gains distributions - Initial Offer price ] : Initial Offer price

    = [ $24.67 + $1.09 - $23.45 ] : $23.45

    = $2.31 : $23.45

    = 0.0985

    or

    = 0.0985 * 100%

    = 9.85%
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