4 months ago, you purchased 800 shares of a mutual fund at an offering price of $46.50 a share. The find imposes a front-end load of 4% and has a total annual expense of 0.95%. The NPV of the fund today is $48.63. There were no fund distributions or dividends. What was your holding period return on this investment?

Question

Quizplus · Accepted Answer

The initial investment per share after the front-end load is $46.50 * (1 - 0.04) = $44.64. The holding period return is calculated as [(Ending Price - Initial Price) / Initial Price] * 100 = [($48.63 - $44.64) / $44.64] * 100 = 8.93%. However, since the holding period is 4 months, the annualized return is (1 + 0.0893)^(12/4) - 1 = 0.0458 or 4.58%.

4 Months Ago, You Purchased 800 Shares of a Mutual