A mutual fund had NAV per share of $16.75 on January 1, 2016. On December 31 of the same year, the fund's rate of return for the year was 26.6%. Income distributions were $1.79, and the fund had capital gain distributions of $2.80. Without considering taxes and transactions costs, what ending NAV would you calculate?

Question

Quizplus · Accepted Answer

The correct answer is A. The ending NAV can be calculated as follows:NAV per share on January 1, 2016: $16.75Rate of return for the year: 26.6%Income distributions: $1.79Capital gain distributions: $2.80Ending NAV per share = (NAV per share on January 1, 2016) * (1 + rate of return) + income distributions + capital gain distributionsEnding NAV per share = $16.75 * (1 + 0.266) + $1.79 + $2.80Ending NAV per share = $16.75 * 1.266 + $1.79 + $2.80Ending NAV per share = $21.25 + $1.79 + $2.80Ending NAV per share = $25.84Therefore, the ending NAV would be $25.84.

A Mutual Fund Had NAV Per Share of $16