What Would Be the Return on a $1,000 Investment in a Mutual

question 24

Essay

What would be the return on a $1,000 investment in a mutual fund whose NAV is $20? The fund has a 3 percent front-end load and during the holding period,$400 of fund distributions are reinvested at a NAV of $25 (no load applied to reinvestments).The fund is ultimately sold at a NAV of $24.(Round to the nearest tenth of a percent.)
(a)14.8 percent
(b)10.5 percent
(c)15.3 percent
(d)10.8 percent

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, indicating the cost of borrowing money or the return on invested savings.

Exhaustible Resource

A natural resource, such as oil or coal, that has a finite supply and can be depleted if used unsustainably.

User Cost

The cost of using a product or service, taking into account factors such as depreciation, wear and tear, and opportunity cost of using the asset rather than investing the money elsewhere.

Depletable Resource

A natural resource that can be diminished by use, such as fossil fuels or minerals, which are not renewable over short time spans.