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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 7 years? Why does your answer change?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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