Mutual Funds

What does diversification in investments aim to do?

• Increase risk by focusing on one asset type.

• Spread investments across different asset types to reduce risk.

• Eliminate all potential losses.

• Focus solely on real estate investments.

How is net return calculated?

• Net Return = Total Investment + Expense Ratio

• Net Return = Annual Return - Expense Ratio

• Net Return = Annual Return + Expense Ratio

• Net Return = Total Investment - Annual Return

If the investment has an annual return of 7.6% and an expense ratio of 1.4%, what is the net return?

How is the Net Asset Value (NAV) of a mutual fund defined?

• The total assets of the fund

• The liabilities of the fund

• The price per share of a mutual fund, updated daily after the market closes

• The total shares outstanding

If the total assets are $14,500,000 and liabilities are $843,000 with 150,000 shares outstanding, what is the NAV?

Find the NAV for a fund with $2,000,000 in assets, $400,000 in liabilities, and 200,000 shares outstanding.

Calculate the future value for a $15,000 investment with a 9% return and 0.5% expense ratio for 10 years.

Calculate the future value for a $15,000 investment with a 7% return and 0.3% expense ratio for 10 years.