Multiple choice

The Income Ratio as a measure of a fund's performance is defined by the funds

  1. total income and total assets

  2. net investment income and net assets

  3. total income and net assets

  4. None of the above

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Income Ratio = Net Investment Income / Average Net Assets. It measures the fund's yield from interest and dividends, excluding capital gains. Using 'net' figures ensures we focus on income actually available to unit holders after expenses. Total income would incorrectly include capital gains, which are not part of regular yield.