University of Central Florida (UCF) FIN2100 Personal Finance and Investments Final Practice Exam

To determine the total return on your investment, we need to consider both the capital gain from the appreciation of the mutual fund shares and the dividend income you received.

Initially, you purchased 100 shares at $10 per share, totaling an initial investment of $1,000 (100 shares x $10). At year-end, the value of the mutual fund shares increased to $15 per share. This means the total value of your shares at year-end is $1,500 (100 shares x $15).

Next, we need to account for the dividend distribution. The fund distributed a $0.75 dividend per share, so for 100 shares, you received a total of $75 in dividends (100 shares x $0.75).

Now, to calculate the total return, first find the increase in the value of your investment, which is the final value minus the initial investment:

\[

\text{Capital Gain} = \text{Final Value} - \text{Initial Investment} = \$1500 - \$1000 = \$500

\]

Then, add the dividend income to the capital gain:

\[

\text{Total Return} = \text{Capital Gain} + \text{Dividends} =