Consider a mutual fund with $260 million in assets at the start of the year and 10 million shares outstanding. the fund invests in a portfolio of stocks that provides dividend income at the end of the year of $2.5 million. the stocks included in the fund's portfolio increase in price by 9%, but no securities are sold and there are no capital gains distributions. the fund charges 12b-1 fees of 1.00%, which are deducted from portfolio assets at year-end. what is the net asset value at the start and end of the year?

$26; $28.057

Explanation:

Total value = $260 million in assets

Shares outstanding = 10 million

Dividends = $2.5 million

Fund value at the start of the year =

                                                         =

                                                         = $26

Fund value at the end of the year:

Dividend per share =

                                =              

                                = $0.25

Price gain at 9% with deduction of 1% of 12b-1

Fund value at the end of the year = $26 × 1.09 × (1 - 0.01)

                                                        = $28.057

the answer is 4 : )

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