Here's an example of how breakpoint discounts on sales commissions for mutual fund investors work:Sales chargeLess than $25,000, 5.75%$25,000 to $49,999, 5.50%$50,000 to 99,999, 4.75%$100,000 to $249,999, 3.75%Nancy Dolan is interested in the T Rowe Price Mid Cap Fund. Assume the NAV is 19.43.a. What minimum amount of shares must Nancy purchase to have a sales charge of 5.50%? (Round up to the nearest share even if itis less than 5.)Minimum amount of shares25,000b. What minimum amount of shares must Nancy purchase to have a sales charge of 4.75%? (Round up to the nearest share even if itis less than 5.)Minimum amount of shares50,000c. What minimum amount of shares must Nancy purchase to have a sales charge of 3.75%? (Round up to the nearest share even if itis less than 5.)Minimum amount of shares100,000d. What would be the total purchase price for (a), (b), or (c)? (Round your answers to the nearest cent.)Total purchase price(a)(b)(c)

NAV refers to net asset value. For a mutual fund its NAV = total assets - total liabilities

Here's an example of how breakpoint discounts on sales commissions for mutual fund investors work: ales charge Less than $25,000, 5.75% $25,000 to $49,999, 5.50% $50,000 to 99,999, 4.75% $100,000 to $249,999, 3.75% lancy Dolan is interested in the T Rowe Price Mid Cap Fund. Assume the NAV is 19.43. . What minimum amount of shares must Nancy purchase to have a sales charge of 5.50%? (Round up to the nearest share even if it s less than 5.)

Here's an example of how breakpoint discounts on sales commissions for mutual fund investors work: ales charge Less than $25,000, 5.75% $25,000 to $49,999, 5.50% $50,000 to 99,999, 4.75% $100,000 to $249,999, 3.75% lancy Dolan is interested in the T Rowe Price Mid Cap Fund. Assume the NAV is 19.43. . What minimum amount of shares must Nancy purchase to have a sales charge of 5.50%? (Round up to the nearest share even if it s less than 5.)

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 2FPE

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Here’s an example of how breakpoint discounts on sales commissions for mutual fund investors work: Sales charge Less than $25,000, 5.25%$25,000 to $49,999, 5%$50,000 to 99,999, 4.25%$100,000 to $249,999, 3.25% Nancy Dolan is interested in the T Rowe Price Mid Cap Fund. Assume the NAV is 19.21. a. What minimum amount of shares must Nancy purchase to have a sales charge of 5%? (Round up to the nearest share even if it is less than 5.) Minimum Amount of Shares: b. What minimum amount of shares must Nancy purchase to have a sales charge of 4.25%? (Round up to the nearest share even if it is less than 5.) Minimum Amount of Shares: c. What minimum amount of shares must Nancy purchase to have a sales charge of 3.25%? (Round up to the nearest share even if it is less than 5.) Minimum Amount of Shares: d. What would be the total purchase price for (a), (b), or (c)? (Round your answers to the nearest cent.) Total Purchase Price: a) b) c)
Here’s an example of how breakpoint discounts on sales commissions for mutual fund investors work: Sales charge Less than $25,000, 6% $25,000 to $49,999, 5.75% $50,000 to 99,999, 5% $100,000 to $249,999, 4% Nancy Dolan is interested in the T Rowe Price Mid Cap Fund. Assume the NAV is 19.06. Here is what we need to find out: A.)What minimum amount of shares must Nancy purchase to have a sales charge of 5.75%? B.) What minimum amount of shares must nancy purchase to have a sales charge of 5%? (round up to the nearest share even if it is less than 5) C.)What minimum amount of shares must Nancy purchase to have a sales charge of 4%?(Round up to the nearest share even if it is less than 5) D.) Then, find out what the total purchase price for A, B and C.
Here’s an example of how breakpoint discounts on sales commissions for mutual fund investors work: Sales charge Less than $25,000, 5.75% $25,000 to $49,999, 5.50% $50,000 to 99,999, 4.75% $100,000 to $249,999, 3.75%= Nancy Dolan is interested in the T Rowe Price Mid Cap Fund. Assume the NAV is 19.43. a. What minimum amount of shares must Nancy purchase to have a sales charge of 5.50%? (Round up to the nearest share even if it is less than 5.) What the minuim amount of shares? b. What minimum amount of shares must Nancy purchase to have a sales charge of 4.75%? (Round up to the nearest share even if it is less than 5.) What the minum amout of shares? What minimum amount of shares must Nancy purchase to have a sales charge of 3.75%? (Round up to the nearest share even if it is less than 5.) What the minuim amout of shares? What would be the total purchase price for (a), (b), or (c)? (Round your answers to the nearest cent.) Total Purchase Price for A B C
Mutual funds can effectively charge sales fees in one of three ways: front-end load fees, 12b-1 (annual) fees, or deferred (back-end) load fees. Assume that the SAS Fund offers its investors the choice of the following sales fee arrangements: (1) a 3 percent front-end load, (2) a 0.50 percent annual deduction, or (3) a 2 percent back-end load, paid at the liquidation of the investor's position. Also, assume that SAS Fund averages NAV growth of 12 percent per year. If you start with $100,000 in investment capital, calculate what an investment in SAS would be worth in three years under each of the proposed sales fee schemes. Which scheme would you choose? If your investment horizon were 10 years, would your answer in part (a) change? Demonstrate.
Mutual funds charge their clients an “expense ratio” for managing yourfunds. A 1.5% annual expense ratio is common in the mutual fund industry.Suppose you invest $100,000 into a fund with a 1.5% expense ratio and leave it invested for 40 years. If you have a personal MARR of 6% per year, your future worth (less the expense ratio) will be $100,000 (1 – 0.015)(F/P, 6%, 40) = 1,013,141. If you invest instead in an exchange traded fund (ETF) that has an expense ratio of 0.1% per year, you will end up with F = $100,000 (1 – 0.001)(F/P, 6%, 40) = $1,027,541 which is $14,400 more than the mutual fund. Moral: Be mindful of expenses being levied on your savings vehicles (e.g., an individual retirement account) for retirement savings. How much will you have in 40 years if the expense ratio is 3.5% per year?
You have $15,000 to invest in a mutual fund. You choose a fund with a 3.5 percent front load, a 1.75 percent management fee, and a 0.5 percent 12b-1 fee. Assume, for simplicity, that the management and 12b-1 fees are charged on year-end assets. The gross annual return on the fund's shares was 12.50 percent. What was your net annual rate of return to the nearest basis point? a. 9.97% b. 6.12% c. 9.25% d. 5.42% e. 8.56%
The Swadhinota open end mutual fund is being sold for Tk.47.85 per share. The fund includes Tk.540 million in securities, Tk.50 million in liabilities and 12 million shares outstanding. a. Is the fund charging any load? If so, how much is the amount of the load. b. By what percentage of the NAV should the price of the fund rise or fall for the fund to break even with the purchase value?
Consider a no-load mutual fund with $200 million in assets and 11 million shares at the start of the year, and $410 million in assets and 14 million shares at the end of the year. Investors have received income distributions of $4 per share, and capital gains distributions of $0.70 per share. Assuming that the fund carries no debt, and that the total expense ratio is 1%, what is the rate of return on the fund? Multiple Choice O. 85.31% O 33.61% O. 70.00% O. There is not sufficient information to answer this question
Investor Matt has $661,000 to invest in a CD and a mutual fund. The CD yields 7.3% and the mutual fund yields an average of 7.7%. The mutual fund requires a minimum investment of $20,000, and Matt requires that at least 4 times as much money be invested in the CD as in the mutual fund. You must invest in order to maximize his return. What is the maximum return? Enter 0 if no investment can be made satisfying the requirements. $ . Round to the nearest cent.
Consider a no-load mutual fund with $457 million in assets and 12 million shares at the start of the year, and $520 million in assets and 13.21 million shares at the end of the year. During the year investors have received income distributions of $2.25 per share, and capital gains distributions of $1.57 per share. Assume that the fund carries no debt. What is the rate of return on the fund? Group of answer choices 15.33% 13.03% 13.39% 12.31% 11.42%
You have $16,000 to invest in a mutual fund with an NAV = $45. You choose a fund with a 4 percent front load, a 1 percent management fee, and a 0.25 percent 12b-1 fee. Assume that the management and 12b-1 fees are charged on year-end assets. The gross annual return on the fund's shares was 9 percent. What was your net annual rate of return to the nearest basis point? a. 3.33% b. 7.64% c. 6.25% d. 4.52% e. 4.64%
Investor Dan has $740,000 to invest in a CD and a mutual fund. The CD yields 3.6% and the mutual fund yields an average of 8.4%. The mutual fund requires a minimum investment of $19,000, and Dan requires that at least 4 times as much money be invested in the CD as in the mutual fund. You must invest in order to maximize his return. How much should you invest in the CD? Enter 0 if no investment can be made satisfying the requirements. $ . Round to the NEAREST CENT.