One Year Ago, You Purchased $5,000 Worth of a Mutual

question 6

Multiple Choice

One year ago, you purchased $5,000 worth of a mutual fund at an offering price of $42.09 a share. Today, the fund distributed $0.18 in short-term gains and $1.79 in long-term gains. The current offering price is $43.80. The fund has a front-end load of 5 percent and total annual operating expenses of 1.3 percent. What is your rate of return on this investment?

• A) 2.87 percent
• B) 3.54 percent
• C) 6.06 percent
• D) 8.74 percent
• E) 9.91 percent

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Definitions:

Conduit

An entity that acts as an intermediary by channeling funds from lenders to borrowers or investors.

Financial Markets

Platforms or environments where buyers and sellers trade financial securities, commodities, and other fungible assets.

Intermediaries

Entities or people who act as a middleman or agent between two parties in a financial transaction or negotiation.

Financial Intermediary

An institution that acts as a middleman between savers and borrowers, such as a bank or investment firm.