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CFA Level I · CFA Level I Exam · Returns of Financial Assets and Instruments

A fund manager reports a return calculated after deducting trading commissions and bid-ask spread costs but before deducting the management fee and other administrative expenses charged to the fund. This return is most accurately described as a:

The return is a gross return. Gross return is measured after trading costs such as commissions and spreads but before management fees, administrative expenses and taxes are deducted. Net return would deduct those fees, and real return adjusts for inflation.

  1. Agross returnCorrect
  2. Bnet return
  3. Creal return

Explanation

Gross return is earned after trading expenses but before management and administrative fees and taxes. Net return deducts those fees. Real return adjusts for inflation, which is unrelated to the costs described here.

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