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Finra Exam Series-6 Topic 5 Question 85 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 85
Topic #: 5

[All Series-6 Questions]

Doc purchased shares of the MedTech Fund at its net asset value of $9.66 a share at the beginning of the year. The fund distributed dividends of $0.12 a share and capital gains of $0.10 a share during the year.

The net asset value at the end of the year was $12.00. The fund's total return was:

A21.3%.

B26.5%.

C25.5%.

D10.1%.

Show Suggested Answer

Suggested Answer: B

The fund's beginning NAV was $9.66, its ending NAV was $12.00, and its distributions during the year totaled $0.22 a share, so the total return on the MedTech Fund over this period was 26.5%. Total return can be calculated as:

[(ending NAV + distributions) - beginning NAV]/beginning NAV = [($12.00 + $0.22) -$9.66]/$9.66 = 26.5%.

by Lauran at Aug 25, 2024, 09:32 PM

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Eva

3 months ago

This is an easy one! The fund made a killing this year. B) 26.5% all the way. (Though I wish I had invested in it earlier!)

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Pearline

3 months ago

A) 21.3% is tempting, but it doesn't account for the dividends and capital gains. I'll have to go with B) 26.5%.

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Iesha

2 months ago

Exactly, that's why B) 26.5% is the most accurate choice in this scenario.

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Nikita

2 months ago

So, the net asset value at the end of the year plus the distributions divided by the initial net asset value gives us the total return.

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Amos

2 months ago

I agree, the total return should include all the distributions made by the fund.

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Arlean

2 months ago

I think B) 26.5% is the correct answer because it takes into account the dividends and capital gains.

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Ashlee

3 months ago

I calculated it too, and I also got B) 26.5% as the total return.

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Andrew

3 months ago

I agree with Willie, the capital gains and dividends increase the total return.

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Kasandra

3 months ago

D) 10.1% seems too low. The net asset value increase alone would be more than that. I'll go with C) 25.5%.

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Phil

3 months ago

I think the answer is B) 26.5%. The increase in net asset value plus the dividends and capital gains add up to a 26.5% return.

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Bettyann

3 months ago

User2

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Genevieve

3 months ago

User1

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Willie

3 months ago

I think the answer is B) 26.5%.

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