Question
In: Finance
You are considering an investment in a mutual fund with a 5% load and an expense...
You are considering an investment in a mutual fund with a 5% load and an expense ratio of 1.25%. 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. Round your answer to 2 decimal places.)
b. If you plan to invest for six 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. Round your answer to 2 decimal places.)
c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 1.50% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
You are considering an investment in a mutual fund with a 5% load and an expense...
You are considering an investment in a mutual fund with a 5%
load and an expense ratio of 1%. You can invest in a bank CD paying
5% interest.
a. If you plan to invest for 6 years , what annual rate of return
must the fund portfolio earn for you to be better off in the fund
than in the CD? Does load fee reduce your effective investment
amount? Why?
b. If you plan to invest for two years...
You are considering an investment in a mutual fund with a 5% load and an expense...
You are considering an investment in a mutual fund with a 5%
load and an expense ratio of 0.7%. 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. Round your answer
to 2 decimal places.) Annual...
You are considering an investment in a mutual fund with a 5%load and expense ratio...
You are considering an investment in a mutual fund with a 5%
load and expense ratio of 0.5%. You can invest instead in a bank CD
paying 3% interest.a. If you plan to invest for 4 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. Round
your answer to 2 decimal places.)b. What annual rate...
You are considering an investment in a mutual fund with a 5% load and expense ratio...
You are considering an investment in a mutual fund with a 5%
load and expense ratio of 0.75%. You can invest instead in a bank
CD paying 3% 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. What annual rate of return must the fund
portfolio earn if you plan...
You are considering an investment in a mutual fund with a 3% load and an expense...
You are considering an investment in a mutual fund with a 3%
load and an expense ratio of 0.6%. You can invest instead in a bank
CD paying 5% 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. Round your answer to 2 decimal
places.)
Annual...
You are considering an investment in a mutual fund with a 4% load and an expense...
You are considering an investment in a mutual fund with a 4%
load and an expense ratio of 0.5%. You can invest instead in a bank
CD paying 6% 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. Round
your answer to 2 decimal places.)
8.69...
You are considering an investment in a mutual fund with a 7% load and an expense...
You are considering an investment in a mutual fund with a 7%
load and an expense ratio of 0.5%. You can invest instead in a bank
CD paying 3% interest. a. If you plan to invest for 5 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. Round your answer
to 2 decimal places.) b....
You are considering an investment in a mutual fund with a 3% load and an expense...
You are considering an investment in a mutual fund with a 3%
load and an expense ratio of 1.2%. You can invest instead in a bank
CD paying 5% interest.
c. Now suppose that instead of a front-end load
the fund assesses a 12b-1 fee of 1.45% per year. What annual rate
of return must the fund portfolio earn for you to be better off in
the fund than in the CD? (Do not round intermediate
calculations. Round your answer...
You are considering an investment in a mutual fund with a 1.9% load and expense ratio...
You are considering an investment in a mutual fund with a 1.9%
load and expense ratio of .5%. You can invest instead in a bank CD
paying 6% interest. If you plan to invest for 5 years, what annual
gross 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.
Round your answer to 4 decimal places. For example, if your
answer is 3.205%,...
You are considering an investment in a mutual fund with a 7% load and expense ratio...
You are considering an investment in a mutual fund with a 7%
load and expense ratio of 0.25%. You can invest instead in a bank
CD paying 3% 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. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
b. What...
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