Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.90%

Question

Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.90%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and an expense ratio of 0.10%. Assume the rate of return on both funds’ portfolios (before any fees) is 5% per year. a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Loaded-Up Fund $ Economy Fund $ b. How much will an investment of $100 in each fund grow to after 2 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Loaded-Up Fund $ Economy Fund $ c. How much will an investment of $100 in each fund grow to after 9 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Loaded-Up Fund $ Economy Fund $

Explanation / Answer

Exp Ratio=.01+.0090=1.90% LU-Fund(yr1)=100*(1+0.05-.0190)=$103.10 LU-Fund(yr2)=100*(1+0.05-.0190)^2= $106.30 LU-Fund(yr9)=100*(1+0.05-.0190)^9= $131.62 E-Fund(yr1)=100*0.98*(1+.05-.0010)= $102.80 E-Fund(yr2)=100*0.98*(1+.05-.0010)^2= $107.84 EFund(yr9)=100*0.98*(1+.05-.0010)^9= $150.73

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.