You have $15,000 to invest in a mutual fund. You choose a fund with a 5% front l

Question

You have $15,000 to invest in a mutual fund. You choose a fund with a 5% front load, a 1.75% management fee and a 0.5% 12b-1 fee. Assume that the management and 12b-1 fees are charged on year end assets for simplicity. The gross annual return on the fund's shares was 12.5%. What was your net annual rate of return to the nearest basis point?

A) 4.47%

B) 6.12%

C) 9.25%

D) 5.42%

E)8.56%

An employee contributes 9% of his salary to his 401(k) plan and the employer matches with 40 percent of his first 6% of the employee's salary. The employee earns $90,000 and is in a 28% tax bracket. If the employee earns 2.5% on the plan investments, what is his one year rato of return relative to the net amount of money he invested?

A) 16.28%

B) 51.25%

C) 80.32%

D) 93.52%

E) 29.72%

Explanation / Answer

C. 9.25% ( 12.5 - 5 + 1.75)

A. 16.28%.

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