You have

$$$$7$ comma $100\mathrm{.}007,100\mathrm{.}00$

to invest and must choose between a$$ no$-$load, open$-$end mutual fund with an annual expense ratio of

$0\mathrm{.}850\mathrm{.}85$

percent but no transaction cost and an ETF with an annual expense ratio of

$0\mathrm{.}200\mathrm{.}20$

percent and a transaction cost of

$ $20\mathrm{.}00$$$20\mathrm{.}00.$

a$.$ Calculate which is the lower cost alternative to purchase.

b$.$ Calculate the net proceeds associated with each option if you hold the mutual fund for $6$ months and sell after a gain of

$99$

percent per $6$ months.

c$.$ Calculate the net proceeds associated with each option if you hold the mutual fund for

$11$

year and achieve a gain of

$88$

percent per year.

d$.$ Calculate the net proceeds associated with each option if you hold the mutual fund for

$11$

year and experience a loss of

$77$

percent per year.

Question content area bottom

Part $1$

a$.$ Calculate which is the lower cost alternative to purchase. $($Select the best answer$$ below.$)$

A$.$

The cost is$$ $$0$ to purchase the ETF versus$$ $$20$ to purchase the$$ no$-$load fund. Regardless of the initial investment$$ amount, the lower cost alternative to purchase is the ETF.

B$.$

The cost is$$ $$0$ to purchase the$$ no$-$load fund versus$$ $$20$ to purchase the ETF. Regardless of the initial investment$$ amount, the lower cost alternative to purchase is the$$ no$-$load, open$-$end mutual fund.

Part $2$

b$.$ If you hold the mutual fund for $6$ months and sell after a$6-$month gain of

$99\%,$

the net proceeds associated with the$$ no$-$load fund are

$$$enter your response here.

$($Round to the nearest$$ cent.$)$

Part $3$

If you hold the mutual fund for $6$ months and sell after a$6-$month gain of

$99\%,$

the net proceeds associated with the ETF are

$$$enter your response here.

$($Round to the nearest$$ cent.$)$

Part $4$

c$.$

If you hold the mutual fund for $1$ year and sell after a

$11-$year

gain of

$88\%,$

the net proceeds associated with the$$ no$-$load fund are

$$$enter your response here.

$($Round to the nearest$$ cent.$)$

Part $5$

If you hold the mutual fund for $1$ year and sell after a

$11-$year

gain of

$88\%,$

the net proceeds associated with the ETF are

$$$enter your response here.

$($Round to the nearest$$ cent.$)$

Part $6$

d$.$

If you hold the mutual fund for $1$ year and sell after a

$11-$year

loss of

$77\%,$

the net proceeds associated with the$$ no$-$load fund are

$$$enter your response here.

$($Round to the nearest$$ cent.$)$

Part $7$

If you hold the mutual fund for $1$ year and sell after a

$11-$year

loss of

$77\%,$

the net proceeds associated with the ETF are

$$$enter your response here.

$($Round to the nearest$$ cent.$)$