# Part A Required: An open-end fund has a net asset value of $10.70 per share. It is

## Question:

Part A

**Required:**

An open-end fund has a net asset value of $10.70 per share. It is sold with a front-end load of 6%. What is the offering price? **(Round your answer to 2 decimal places.)**

Part B

**Required:**

If the offering price of an open-end fund is $12.30 per share and the fund is sold with a front-end load of 5%, what is its net asset value? **(Round your answer to 2 decimal places.)** Part C

The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding.

**Required:**

**a. **What is the NAV of the fund? **(Round your answer to 2 decimal places.)** **b. **If the fund sells for $36 per share, what is its premium or discount as a percent of NAV?** (Input the amount as a positive value. Do not round your intermediate calculations. Round your answer to 2 decimal places.)** Part D

Corporate Fund started the year with a net asset value of $12.50. By year-end, its NAV equaled $12.10. The fund paid year-end distributions of income and capital gains of $1.50.

**Required:**

What was the rate of return to an investor in the fund? **(Round your answer to 2 decimal places.)**

Part E

A closed-end fund starts the year with a net asset value of $12. By year-end, NAV equals $12.10. At the beginning of the year, the fund is selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 7% discount to NAV. The fund paid year-end distributions of income and capital gains of $1.50.

**Required:**

**a. **What is the rate of return to an investor in the fund during the year? **(Do not round intermediate calculations. Round your answer to 2 decimal places.)** **b. **What would have been the rate of return to an investor who held the same securities as the fund manager during the year?** (Round your answer to 2 decimal places.)**

Part F

Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.75%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and has an expense ratio of 0.25%. Assume the rate of return on both funds' portfolios (before any fees) is 6% per year.

**Required:**

**a. **How much will an investment of $100in each fund grow to after 1 year? **(Do not round intermediate calculations. Round your answers to 2 decimal places.)**

**b. **How much will an investment of $100in each fund grow to after 3 years? **(Do not round intermediate calculations. Round your answers to 2 decimal places.**

**c. **How much will an investment of $100in each fund grow to after 10 years? **(Do not round intermediate calculations. Round your answers to 2 decimal places.)** Part G

Consider a mutual fund with $200 million in assets at the start of the year and with 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $2 million. The stocks included in the fund's portfolio increase in price by 8%, but no securities are sold, and there are no capital gains distributions. The fund charges 12b-1 fees of 1%, which are deducted from portfolio assets at year-end.

**Required:**

**a. **What is the net asset value at the start and end of the year? **(Enter your answers in dollars rounded to 3 decimal places.)**

**b. **What is the rate of return for an investor in the fund? **(Do not round intermediate calculations. Round your answer to 2 decimal places.)**

Part H

**Required:**

You purchased 1,000 shares of the New Fund at a price of $20 per share at the beginning of the year. You paid a front-end load of 4%. The securities in which the fund invests increase in value by 12% during the year. The fund's expense ratio is 1.2%. What is your rate of return on the fund if you sell your shares at the end of the year? **(Do not round intermediate calculations. Round your answer to 2 decimal places.)**

Part I

The Investments Fund sells Class A shares with a front-end load of 6% and Class B shares with 12b-1 fees of 0.5% annually as well as back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume the portfolio rate of return net of operating expenses is 10% annually.

**Required:** **a. **If you plan to sell the fund after four years, are Class A or Class B shares the better choice for you? multiple choice 1

- Class A
- Class B
- Neither

**b. **What if you plan to sell after 15 years? multiple choice 2

- Class A
- Class B
- Neither

Part J

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.

**Required:**

**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 0.75% 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.)**

**Related Book For**