Understanding Mutual Fund Return Calculation

How do you calculate the return for a mutual fund over the last year?

According to the given statement the return for this mutual fund over the last year will be $66 + $45 = $111. So $111 is the return for this mutual fund.

Calculation of Mutual Fund Return

To calculate the return for this mutual fund over the last year, we need to consider the changes in net asset value and dividends.

Step 1: Calculate the change in net asset value:

The net asset value one year ago was $6.12, and the mutual fund has issued 100 shares. So, the total value of the mutual fund one year ago was 100 shares * $6.12 = $612.

Step 2: Calculate the current value of the mutual fund:

To determine the current value of the mutual fund, we need to calculate the value of the stocks it owns. The mutual fund owns 1 share each of Target, Apple, Johnson and Johnson, and Honeywell. The current value of each stock is as follows:

• Target stock: 1 share * $160 = $160
• Apple stock: 1 share * $139 = $139
• Johnson and Johnson stock: 1 share * $171 = $171
• Honeywell stock: 1 share * $208 = $208

Therefore, the total current value of the mutual fund is $160 + $139 + $171 + $208 = $678.

Step 3: Calculate the return:

The change in net asset value is the difference between the current value ($678) and the value one year ago ($612), which is $678 - $612 = $66. The dividend paid this year is $0.45 per share, and there are 100 shares in total. So, the total dividend paid is $0.45 * 100 = $45.

By adding the change in net asset value ($66) to the dividend paid ($45), the return for this mutual fund over the last year is $66 + $45 = $111. In conclusion, the return for this mutual fund over the last year is $111.