FIN 1103-3 FIN1103-3 Individual Week 11-2
FIN 1103-3 Individual Week 11 Part 2
2. For each pair of funds listed below, select the fund that would be the least risky and briefly explain your answer.
3. About a year ago, Nigel Palmer bought some shares in the Equity Partners Fund. He bought the stock at $24.50 a share, and it now trades at $26.00. Last year, the fund paid dividends of 40 cents a share and had capital gains distributions of $1.83 a share.
Using the approximate yield formula, what rate of return did Nigel earn on his investment?
5. Do an online search and see what information you can find on the PowerShares QQQ ETF. Discuss what information you need to evaluate the performance of the ETF, and use what you find to evaluate the QQQ ETF. What kind of investor should invest in this ETF?
6. A year ago, the Alpine Growth Fund was being quoted at an NAV of $21.50 and an offer price of $23.35; today, it’s being quoted at $23.04 (NAV) and $25.04 (offer). Use the approximate yield formula or a handheld financial calculator to find the rate of return on this load fund; it was purchased a year ago, and its dividends and capital gains distributions over the year totaled $1.05 a share. (Hint: As an investor, you buy fund shares at the offer price and sell at the NAV.)