One year ago, Super Star Closed-End Fund had an NAV of $10.40 and was selling at an

Question:

18% discount. Today, its NAV is $11.69 and it is priced at a 4% premium. During the year, Super

Star paid dividends of $0.40 and had a capital gains distribution of $0.95. On the basis of this information, calculate each of the following:

a. Super Star’s NAV-based holding period return for the year.

b. Super Star’s market-based holding period return for the year. Did the market premium/discount hurt or add value to the investor’s return? Explain.

c. Repeat the market-based holding period return calculation, except this time assume the fund started the year at an 18% premium and ended it at a 4% discount. (Assume the beginning and ending NAVs remain at $10.40 and $11.69, respectively.) Is there any change in this measure of return? Why?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...