A mutual fund had average daily assets of $2.0 billion in 2016.The fund sold $500 million worth of stock and purchased $600 million worth of stock during the year.The fund's turnover ratio is

Question

Quizplus · Accepted Answer

To calculate the turnover ratio, we need to divide the total value of securities bought and sold during the year by the average daily assets.

Total value of securities bought and sold = $500 million (sold) + $600 million (bought) = $1.1 billion

Turnover ratio = ($1.1 billion / $2.0 billion) x 100% 
= 55%

Therefore, the closest answer is D) 25%, which is the only option that is in the 20-30% range.

A Mutual Fund Had Average Daily Assets of $2