Response to the following problem:
One year ago, Super Star Listed Fund had an NTA of $10.40 and was selling at an 18% discount; today its NTA is $11.69 and it is priced at a 4% premium. During the year, Super Star made income distributions of 40 cents and had a capital gains distribution of 95 cents. On the basis of the above information, calculate each of the following:
a. Super Star's NTA-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 that the fund started the year at an 18% premium and ended it at a 4% discount. (Assume the beginning and ending NTAs remain at $10.40 and $11.69, respectively.) Is there any change in this measure of return? Why?