Residual Income Is Calculated as

question 126

Multiple Choice

Residual income is calculated as

• A) operating income - (ROI *average operating assets).
• B) operating income/(ROI *average operating assets).
• C) operating income/(minimum rate of return * average operating assets).
• D) operating income -(minimum rate of return * average operating assets).
• E) (minimum rate of return * average operating assets)/operating income.

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Definitions:

Expense Ratio

The annual fee that all mutual funds and ETFs charge their shareholders, expressed as a percentage of the fund's average net assets.

NAV

Net Asset Value, the per-share value of a mutual fund or ETF, calculated by dividing the total value of all the securities in the portfolio, minus liabilities, by the number of shares outstanding.

Front-end Load

A commission or sales charge applied at the time of the initial purchase of an investment, usually used in mutual funds.

Back-end Load

A fee paid by an investor when shares are sold, typically used in mutual funds, where the fee decreases over time the investment is held.