Suppose that at the start of the year, a no-load mutual fund has a net asset value of $27.15 per share. During the year, it pays its shareholders a capital gain and dividend distribution of $1.12 per share and finishes the year with an NAV of $30.34.
a. What is the return to an investor who holds 257.876 shares of this fund in his (non-taxable) retirement account?
b. What is the after-tax return for the same investor if these shares were held in an ordinary savings account? Assume that the investor is in the 30 percent tax bracket.
1) Return to an investor will... View the full answer