QUESTIONS

$1-$ What is a $12$b$-1$ fee?

$2-$ Why can closed$-$end funds sell at prices that differ from net value while open$-$end funds do not?

$3-$ What are some differences between hedge funds and mutual funds?

PROBLEMS

$1-$ An open$-$end fund has a net asset value of $$10\mathrm{.}70$ per share. It is sold with a front$-$end load of $6\%.$ What is the offering price?

$2-$ If the offering price of an open$-$end fund is $$12\mathrm{.}30$ per share and the fund is sold with a front$-$end load of $5\%,$ what is its net asset value

$3-$ 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.

a$.$ What is the NAV of the fund?

b$.$ If the fund sells for $$36$ per share, what is its premium or discount as a percent of net asset value?

$4-$ Corporate Fund started the year with a net asset value of $$12\mathrm{.}50.$ By year$-$end, its NAV equaled $$12\mathrm{.}10.$ The fund paid year$-$end distributions of income and capital gains of $$1\mathrm{.}50.$ What was the $($pretax$)$ rate of return to an investor in the fund?

$5-$ The New Fund had average daily assets of $$2\mathrm{.}2$ billion last year. If New Fund$$s expense ratio was $1\mathrm{.}1\%$ and the management fee was $\mathrm{.}7\%,$ what were the total fees paid to the fund$$s investment managers during the year? What were other administrative expenses?