Question 5 Over the course of 20 years, the gross return of both an equity index...

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Question 5 Over the course of 20 years, the gross return of both an equity index fund and a higher-fee actively managed mutual fund is 9.8% per year. The index fund has an annual expense ratio of 0.09%, while the actively managed fund has an expense ratio of 0.95%, and in addition carries a front load of 3.4%. If you invest 100k into each of the funds at the beginning of this time period, after 20 years how much more money will you have in the index fund relative to the active fund? Question 6 At the start of the year you own 100 shares of a mutual fund in a taxable investment account. At the beginning of the tax year the fund NAV was $51.6 per share, and the end of year NAV is $62.8 per share. At the end of the year, the fund made distributions of $1.9 in qualified dividends, $2.3 in short term capital gains, and $2.6 in long term capital gains. If your marginal income tax rate is 25 %, and your marginal capital gains tax rate is 12%, what is the final after-tax value of your holdings in the mutual fund? Question 5 Over the course of 20 years, the gross return of both an equity index fund and a higher-fee actively managed mutual fund is 9.8% per year. The index fund has an annual expense ratio of 0.09%, while the actively managed fund has an expense ratio of 0.95%, and in addition carries a front load of 3.4%. If you invest 100k into each of the funds at the beginning of this time period, after 20 years how much more money will you have in the index fund relative to the active fund? Question 6 At the start of the year you own 100 shares of a mutual fund in a taxable investment account. At the beginning of the tax year the fund NAV was $51.6 per share, and the end of year NAV is $62.8 per share. At the end of the year, the fund made distributions of $1.9 in qualified dividends, $2.3 in short term capital gains, and $2.6 in long term capital gains. If your marginal income tax rate is 25 %, and your marginal capital gains tax rate is 12%, what is the final after-tax value of your holdings in the mutual fund?

Answer rating: 100% (QA)

Answer 5 The gross return of the index fund is 98 009 971 and the gross return of the actively manag... View the full answer