At the Beginning of the Year,you Invested $7,500 in a No-Load

question 7

Multiple Choice

At the beginning of the year,you invested $7,500 in a no-load mutual fund with a NAV of $30.00.At the end of the year,the fund distributed $1.05 per share in short-term earnings and $3.00 per share in long-term earnings.The end of year NAV was $24.75.What was your annual rate of return on this investment?

• A) -4.00 percent
• B) -1.96 percent
• C) 10.80 percent
• D) 14.20 percent
• E) 16.90 percent

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Definitions:

Insurance Expense

The cost incurred by a business or individual for purchasing insurance policies to protect against potential losses or liabilities.

Prepaid Insurance

An asset account that represents insurance expenses paid in advance and is recognized as an expense over the period the insurance contract covers.

Accrued Revenues

Revenues that have been earned but not yet received in cash or recorded at the statement date, often due to the provision of goods or services before payment.

Adjusting Entry

An accounting entry made at the end of an accounting period to allocate income and expenditure to the appropriate period, ensuring that financial statements adhere to the accrual basis of accounting.