Practice Quiz

FINRA Series 6

Category - Series 6

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Which of the following formulae is used to calculate the net dividend income per share of a mutual fund?
  1. Subtract operating expenses from dividend and interest income and divide the result by the number of outstanding shares.
  2. Divide gross investment income by the number of outstanding shares.
  3. Subtract operating expenses from the income derived from dividends, interest, and short-term capital gains earned by the fund and divide the result by the number of outstanding shares.
  4. Add dividends, interest, and short-term and long-term capital gains earned by the fund; subtract operating expenses; then divide the result by the number of outstanding shares.
Explanation
Answer: A - The formula that is used to calculate the net dividend income per share of a mutual fund is: Subtract operating expenses from dividend and interest income and divide the result by the number of outstanding shares. Net dividend income per share is calculated by dividing net investment income by the number of shares outstanding, and net investment income is the income (dividends and interest) generated by the fund’s investments minus the fund’s operating expenses.
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