The XYZ Equity Fund sells Class A shares with a front-end load of 3% and Class...

The XYZ Equity Fund sells Class A shares with a front-end load of 3% and Class B shares with 12b-1 fees of 0.4% 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 8% annually.

(a) (9 points) What will be the value of a $5,000 investment in Class A and Class B shares if the shares are sold after (a) 2 years, (b) 3 years, (c) 10 years?

(b) (6 points) Which fee structure provides higher net proceeds at the end of each investment horizon?

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Dear student, please "UPVOTE" the solution. Thank you :)

jeff jeffy answered 1 year ago

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