An investor pays a NAV per share of €7.74 and purchases 100 shares in the Zebra...

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An investor pays a NAV per share of €7.74 and purchases 100 shares in the Zebra...

An investor pays a NAV per share of €7.74 and purchases 100 shares in the Zebra Fund. After several months the NAV per share has dropped to €6.80 per share, however the fund still earned €0.75 per share in dividend income. What was the investors return on this investment?

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Answer 1

Answer #1

Investors return on the investment

Fund Value at the beginning = €774 [100 Shares x €7.74 per share]

Fund Value at the end = €680 [100 Shares x €6.80 per share]

Total Dividend received = €75 [100 Shares x €0.75 per share]

Investors return on this investment = [{(Fund value at the end - Fund value at the beginning) + Total Dividend received} / Fund Value at the beginning] x 100

= [{(€680 - €774) + €75} / €774] x 100

= [(-€94 + €75) / €774] x 100

= [-€19 / €774] x 100

= -2.45% (Negative Return)

“Hence, the Investors return on this investment will be -2.45% (Negative Return)”

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Answer 2

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An investor pays a NAV per share of €7.74 and purchases 100 shares in the Zebra...

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