Question Use the approximate yield formula to compute the rate of return on the investment in Part A and B, respectively. Show your steps to get partial credit. For dollar amount, keep two decimal places. For the approximate yields, keep three decimal places and express them as percentages.

A Paul purchased 100 shares of a no-load mutual fund at a net asset value (NAV) of $85 per share. During the year, Paul received dividend income distributions of $4.50 per share and capital gains distributions of $9.10 per share. At the end of the year, the shares had a NAV of $80 per share.

B Baron Growth Fund is a load fund. Two years ago, it was being quoted at a NAV of $33.50 and an offer price of $35.80; today, its being quoted at a NAV of $34.18 and an offer price of $36.05. Use the approximate yield formula to calculate the rate of return on this load fund. The dividends and capital gains distributions over the two-year period are totaled at $2.80 a share.

C If the growth fund in Part B above were a no-load fund, other things being equal, would the rate of return be higher or lower than that calculated in Part B? Why?