Consider a fund that charges 5% front-end load. In an average year, the fund's reported return...

Consider a fund that charges 5% front-end load. In an average year, the fund's reported return is 11.5%. What is the average realized annual return to an investor investing in the fund for 3 years?

Hint: it might help to start with a fixed dollar investment. Choose any number you like.

Solutions

Expert Solution

jeff jeffy answered 1 month ago

Next > < Previous

Related Solutions

You are considering an investment in a mutual fund with a 5% front-end load and an...

You are considering an investment in a mutual fund with a 5% front-end load and an expense ratio of 1.45%. You can invest instead in a bank CD paying 7% interest. a. If you plan to invest for two years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Enter your answer as a percentage rounded...

You are considering an investment in a mutual fund with a 5% front-end load fee and...

You are considering an investment in a mutual fund with a 5% front-end load fee and expense ratio of 0.25%. You can invest instead in a bank CD paying 2% interest. (a) If you plan to invest for 3 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (b) How does your answer change if you plan to invest for...

Which of the following is NOT a mutual fund charge/fee A. 12b-1 charges B. Front-End load...

Which of the following is NOT a mutual fund charge/fee A. 12b-1 charges B. Front-End load C. Back-End load D. Prepayment fee

You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees,...

You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees, and a 0.5% back-end load. How much will you pay in fees on a $15,000 investment that does not grow if you cash out after 5 years of no gain? You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees, and a 2% back-end load, which decreases .5% per year. How much will you pay in fees on...

You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees,...

You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees, and a 0% back-end load on Class A shares. The same fund charges a 0% front-end load, 2% total annual fees, and a 2% back-end load on Class B shares. If you plan to sell the fund after 4 years, which is a better choice, Class A shares or Class B shares? Assume $100 is invested, and assume a 10% annual return before expenses.

A mutual fund charges 6% front-end load and 1% operating and 12b-1 expenses. At the beginning...

A mutual fund charges 6% front-end load and 1% operating and 12b-1 expenses. At the beginning of the year, the fund has $100 million assets under management and 10 million shares outstanding. During the year the value of assets held by the fund increases by 12% and the fund receives dividends of $1 million. What is the fund's NAV at the end of the year? (The number of mutual fund shares outstanding is still 10 million at the end of...

A mutual fund charges 6% front-end load and 3% operating and 12b-1 expenses. At the beginning...

A mutual fund charges 6% front-end load and 3% operating and 12b-1 expenses. At the beginning of the year, the fund has $200 million assets under management and 10 million shares outstanding. During the year the value of assets held by the fund increases by 10% and the fund receives dividends of $2 million. What is the fund's NAV at the end of the year? (The number of mutual fund shares outstanding is still 10 million at the end of...

The XYZ Equity Fund sells Class A shares with a front-end load of 5% and Class...

The XYZ Equity Fund sells Class A shares with a front-end load of 5% and Class B shares with 12b-1 fees of 0.6% annually as well as back-end load fees that start at 4% and fall by 1% for each full year the investor holds the portfolio (until the fourth year). Assume rate of return on the fund portfolio net of operating expenses is 9% annually. (a) (9 points) What will be the value of a $10,000 investment in Class...

Fund A has a front-end load of 4.5% (of the year-beginning amount). Meanwhile, Fund B has...

Fund A has a front-end load of 4.5% (of the year-beginning amount). Meanwhile, Fund B has a backend load of 6% which decreases by 1% per year. That is, the backend load will be at 5% if the investor sells the fund at the end of year 2, 4% at the end of year 3, and so on, until it becomes zero. In addition, Fund B charges additional 12b-1 fee of 0.5% per year at each year end. Assume Fund...

You are considering an investment in a mutual fund with a 4% front-end load. The fund...

You are considering an investment in a mutual fund with a 4% front-end load. The fund charges a back-end load of 5, 4, 3, 2, and 1 percent if the shares are redeemed within the first 5 years, respectively. The expense ratio of 0.5%. Alternatively, you can invest instead in a bank saving account paying 6% interest per year. 1. If you plan to invest for 3 years, what annual rate of return must the fund portfolio earn for you...

Subjects