On January 1, a mutual fund owns 500 shares of Stock A, 700 shares of Stock B, a
ID: 2753972 • Letter: O
Question
On January 1, a mutual fund owns 500 shares of Stock A, 700 shares of Stock B, and 900 shares of Stock C. The fund has 5,000 shares outstanding. On July 1, the fund sells 450 shares of Stock C. Also on this day, a shareholder purchases 600 new shares of the fund. All money from the purchase of fund shares and the sale of Stock C is used to purchase as many shares of Stock D as possible, rounded to the nearest even hundred shares, i.e. 100, 200, 300, etc). Any money left over from this purchase is invested in cash which has no return. On December 31, the fund sells 200 shares of Stock A.
1) What is NAV of the fund on January 1, July 1, and Dec 31?
2) Assuming the fund distributes all realized capital gains, what is the capital gain distribution per share?
3) What is the annual return for a shareholder who was invested on January 1?
4) What was the fund turnover for the year?
Jan 1 - (Stock A - $34); (B-$63); (C-$52); (D-$48)
July 1 - (Stock A - $38); (B-$65); (C-$61); (D-$46)
Dec. 31 (Stock A - $40); (B-$68); (C-$65); (D-$54)
On January 1, a mutual fund owns 500 shares of Stock A, 700 shares of Stock B, and 900 shares of Stock C. The fund has 5,000 shares outstanding. On July 1, the fund sells 450 shares of Stock C. Also on this day, a shareholder purchases 600 new shares of the fund. All money from the purchase of fund shares and the sale of Stock C is used to purchase as many shares of Stock D as possible, rounded to the nearest even hundred shares, i.e. 100, 200, 300, etc). Any money left over from this purchase is invested in cash which has no return. On December 31, the fund sells 200 shares of Stock A.
1) What is NAV of the fund on January 1, July 1, and Dec 31?
2) Assuming the fund distributes all realized capital gains, what is the capital gain distribution per share?
3) What is the annual return for a shareholder who was invested on January 1?
4) What was the fund turnover for the year?
Jan 1 - (Stock A - $34); (B-$63); (C-$52); (D-$48)
July 1 - (Stock A - $38); (B-$65); (C-$61); (D-$46)
Dec. 31 (Stock A - $40); (B-$68); (C-$65); (D-$54)
Explanation / Answer
2.
2.07
3.
4.
Date Stock A Stock B Stock C Stock D 1-Jan Shares 500 700 900 0 Price 34 63 52 48 Total Asset 17000 44100 46800 0 Outstanding Share 5000 NAV 21.58