50.1K

Verified Solution

Link Copied!

2. Multiple Mutual Funds had year-end assets of $457 000 000 and liabilities of $17 000 000. There were 24 300 000 shares in the fund at year-end. What was Multiple Mutual's Net Asset Value?

3. A closed-end fund starts the year with a net asset value of $12.00. By year-end, NAV equals $12.10. The fund paid dividend income distributions of $0.50 and capital gains distributions of $1.00 per share. At the beginning of the year, the fund was selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 7% discount to NAV.

   a) What is the rate of return to an investor in the fund during the year? b) What would have been the rate of return to an investor who held the same securities as the fund manager during the year?

4. You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock.

   a) What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? The stock currently pays no dividends. b) How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately.

5. You purchased shares of a mutual fund at a price of $12 per share at the beginning of the year and paid a front-end load of 4.75%. If the securities in which the fund invested increased in value by 9% during the year, and the fund's expense ratio was 1.5%. What will be your return if you sold the fund at the end of the year?

6. The fund Low Expense Ratio (LER) has a NAV of $17 per share today and charges a front-end load of 5.0 %. We assume that the value of the securities in which the fund has invested in increases by 12% each year, and that the fund's expense ratio is 1.0 %.

   The fund Low Front-End Load (LFEL) has a Nav of $20 per share today and charges a front- end load of 1.0 %. We assume that the value of the securities in which the fund has invested in increases by 13 % each year, and that the funds expense ratio is 3.5 %.

   Which of the funds should you invest in if your investment horizon is 2 years? Which one should you invest in if your investment horizon is 5 years?

7. On January 1, you sold short 600 shares of Disney stocks at $41 per share. On March1, a dividend of $2.5 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $40 per share. You paid $0.50 per share in commissions for each trade. What is the value of your account on April?

Answer & Explanation Solved by verified expert

See Answer