304 Chapter 6 Investments
Topic Key Ideas, Formulas, and Techniques Examples
NAV of a Mutual Fund, p. 296 • The NAV is the total assets divided by the total
number of shares.Matt owns 96.722 shares of a
mutual fund. The total assets
are $16,509,362 and there are
903,444 shares. How much
is Matt’s investment worth?
(Example 6.4.4)Mutual Fund Performance,
p. 297- Use the initial value of the investment as the
PV, the ending value as the FV, and the CAGR
formula.
In 7 years, a share of a mutual
fund originally worth $172.59
grew to 1.973 shares worth
$154.08 each. Calculate the
average annual rate of return.
(Example 6.4.6)Average Rate of Return,
p. 297- The average rate of return is not calculated in the
usual “average” way. - Find the future value of $100 applying the rates
in succession, then use the CAGR formula.
A mutual fund had annual
returns of 10%, 5%, 8%,
15%, and 3% in each of
the past 5 years. What was
the average rate of return over
this period? (Example 6.4.7)