Question

Problem 17-03 Consider the recent performance of the Closed Fund, a closed-end fund devoted to finding undervalued, thinly traded stocks: Period NAV $10.45 11.70 9.90 10.65 12.35 Premium/Discount 0.0% -4.2 +1.7 -3.1 -7.1 Here, price premiums and discounts are indicated by pluses and minuses, respectively, and Period 0 represents Closed Fund's initiation date. Do not round intermediate calculations. Round your answers to two decimal places. Use a minus sign to enter negative values, if any. a. Calculate the average return (geometric average) per period for an investor who bought 100 shares of the Closed Fund at the initiation and then sold her position at the end of Period 4. % b. What was the average periodic growth rate in NAV over that same period? % C. Calculate the periodic return for another investor who bought 100 shares of Closed Fund at the end of Period 1 and sold his position at the end of Period 2. % d. What was the periodic growth rate in NAV between Periods 1 and 2?

Answer 1

Pls find attached a spreadsheet which shows NAV and Price data along with Returns of each during the 4 periods

From the below spreadsheet you can find the following answers

A = 2.36% B= 5.03% C= -10.17% D= -15.38%

MUTUAL FUND PERFORMANCE Period NAV Prem/Disc Price Price Return NAV Return 10.45 2 10.45 11.70 9.90 10.65 12.35 0.0% -4.2% 1.7% -3.1% -7.1% 11.21 10.07 10.32 11.47 7.26% -10.17% 2.50% 11.18% 11.96% -15.38% 7.58% 15.96% Avg Return (geometric) Avg Growth (periodic) Period 2 Investor return Period 2 NAV return 2.36% 5.03% -10.17% -15.38% (P4/PO)^(1/4) Arith avg of the 4 NAV returns P2/P1 Nav2/Nav1