 QUESTION

# Provide a 2 pages analysis while answering the following question: Describe investment terms that are important to mutual fund buyers. Prepare this assignment according to the guidelines found in the

Provide a 2 pages analysis while answering the following question: Describe investment terms that are important to mutual fund buyers. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. 1. Calculating mutual fund fees Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston Equity mutual fund.

Total assets

\$240,000,000

Total liabilities

8,000,000

Total number of shares

4,400,000

The net asset value per share is equal to the current market value of the mutual fund’s portfolio minus the mutual fund’s liabilities divided by the number of shares outstanding. (Kapoor, 2010, p.512)

Net asset value = \$52(240,000-8000)/4400,000

9.In the prospectus for the Brazos Small Cap Fund, the fee table indicates that the fund has a 12b -1 fee of 0.35 percent and an expense ratio of 1.65 percent that is collected once a year on December 1. If Joan and Don Norwood have shares valued at \$24,000 on December 1:

a. What is the amount of the 12b-1 fee this year?

b. What is the amount they will pay for expenses this year?

a. The 12b-1 fee is \$108.5, as calculated below.

\$108.5= \$31,000 x 0.0035

b. The expense ratio is \$511.5, as calculated below.

\$511.5= \$31,000 x 0.0165

10. Finding Total Return. Assume that one year ago you bought 100 shares of a mutual fund for \$14 per share, you received \$0.75 per share capital gain distribution during the past 12 months, and the market value of the fund is now \$17. Calculate the total return for this investment if you were to sell it now.

Total return is (1) Current return = \$0.75 100 shares = \$75 (Haslem, 2009, p.166)

(2) Future return = \$1,700 sales price - \$1,400 purchase price = \$300

(3) Total return = \$75 current return + \$300.00 future return = \$375

11.Finding Percent of Total Return. Given the information in Question 10, calculate the percent of total return for your \$1,500 investment.

The percent of total return is 25 percent, as illustrated below.

\$375 ÷ 1,400 = 0.26 = 26 percent

References

Haslem, J, A, (2009), Mutual Funds, Business & Economics Kentucky: Cengage Learning

Kapoor, (2010), Personal Finance 8E, New Delhi: Tata McGraw Hill.