Question: A fund is expected to earn 12% while the SPDR is expected to earn 9%. Assume the SPDR has no transaction or tracking costs and

  1. A fund is expected to earn 12% while the SPDR is expected to earn 9%. Assume the SPDR has no transaction or tracking costs and that the two funds have comparable risk. Given the MER of the fund is 2% of assets under management (AUM) at year start, what is the maximum combined feeds on the ISC/DSC of the fund such that an investor would still prefer it over the SPDR?
  1. Cannot be computed with the information provided
  2. 2%
  3. 100 bps
  4. 0%
  5. -1%

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