A mutual fund had average daily assets of $4.7 billion in 2009.The fund sold $2.2 billion worth of stock and purchased $3.6 billion worth of stock during the year.The fund's turnover ratio is ____________.

Question

Quizplus · Accepted Answer

The turnover ratio is calculated as the lesser of the total purchases or sales of securities during the year, divided by the average daily assets.

In this case, the lesser value is the $2.2 billion worth of stock sold.

Turnover Ratio = (Lesser of total purchases or sales/ Average daily assets) x 100
= ($2.2 billion / $4.7 billion) x 100
= 46.8%

Therefore, the mutual fund's turnover ratio is 46.8%, which is option D.

A Mutual Fund Had Average Daily Assets of $4