Question

QUESTION 9 Consider a mutual fund with 171 million dollars in assets at the start of the year, and 29 millon shares outstanding. If the gross annual return last year was 13.4 percent, and the fund charges a total expense ratio of 1.7 percent of end-of-year value, what is the net return to investors? Enter answer in percents, accurate to two decimal places. QUESTION 10 A mutual fund has 389 million dollars in assets, 80 million in liabilities, and 20 million shares outstanding. What is the Net Asset Value per share? QUESTION 11 A fund has $882 million dollars of assets, $21 million of liabilities, and 28 million shares outstanding. During the year the fund made qualified dividend distributions of $1.3 per share, long term capital gains distributions of $1.3, and short-term capital gains distributions of $2.5. What is the after-tax distribution yield, if your marginal income tax rate is 35%, and your long term capital gains tax rate (which also applies to qualified dividends) is 15%? Enter answer in percents, accurate to two decimal places. Extra: How does that compare with pre-tax yield? What are the criteria for dividends to be "qualified" under current tax laws? QUESTION 12 A call option on a stock, with time to maturity of 2 months and strike price of $25.99, is currently trading at a premium of $1.4 per share. If you buy options on 20,000 shares (200 contracts), and then at maturity the stock is trading at $21.43, what is your net profit from this position?

Answer 1

QUESTION 9 :-

Given,

Start of the year value = $ 171000000

Gross annual return (r) = 13.4% or 0.134

Expense ratio = 1.7%

Solution :-

V . End of year Value = Value at start X (1+r) of the year $121000000 x (1 + 0.134) = $171000000 x Panal134) = $ 1939 14000 Total expenses - End of year value & expense ratio = $193914000 x 1.7% z $ 3796538 Net return to investors - – – End of the year value Total expenses Start of the year value = $193914000 - $3296538 - $ 171000000 = $ 19617462

Net return to investors (in %) - Net return to investors Start of the year Value x 100 $19617462 x 100 $171000000 11.47 %