Kenny invested $5,000 in a mutual fund, one year ago, when the offering price was $23.65 per share and the NAV was $23.02 per share. As of today, the fund has distributed a total of $1.34 per share in long-term gains and $.85 per share in short-term gains. The current offering price is $27.71 per share and the NAV is $27.08 per share. What is Kenny's return for the year?

Question

Quizplus · Accepted Answer

First, we need to calculate how many shares Kenny bought. 
$5,000 ÷ $23.65 per share = 211.04 shares (rounded to the nearest hundredth)

Next, we need to calculate the total amount of long-term gains and short-term gains Kenny received: 
($1.34 + $0.85) per share = $2.19 per share

Now, we can calculate Kenny's total return: 
Current value of investment = 211.04 shares × $27.08 NAV = $5,719.47 
Kenny's initial investment was $5,000 
Kenny received $2.19 per share in gains, which is a total of $462.01 in gains 
Total value of investment now = $5,719.47 + $462.01 = $6,181.48

Finally, we can calculate Kenny's return for the year: 
Return = (Ending Value - Beginning Value - Gains) ÷ Beginning Value 
Return = ($6,181.48 - $5,000 - $2.19 × 211.04) ÷ $5,000 
Return = $1,181.48 ÷ $5,000 
Return = 0.2363 or 23.76%

Therefore, the answer is C: 23.76%.

Kenny Invested $5,000 in a Mutual Fund, One Year Ago