4. Comparing mutual fundsUnderstanding the Costs Involved in Mutual Fund InvestmentsThe following table presents information on four different open-end mutual funds. Use the information in the table to answer the questions that follow.FUNDGibEx pPwrSL rPFINMajtrkNAV NET CHG YTD % RET11.32-0.022.530.770.085.427.810.227.942.210.319.0The mutual fundTrueTrue or False: You can generally expect funds that charge back-end load fees to outperform funds that do not charge these fees.charges a back-end load fee.False Suppose Majtrk has a front-end load fee of 9%. If you purchase 100 shares of this fund at the NAV, you will pay a commission of Sin one month, you sell the shares, youpay a redemption fee at that time.If you are interested only in funds without any fee, youthe quotations as listed in the table, it is11,to use additional online resources to find no-load funds, because using onlyto determine the amount of any front-end load fee that the fund may charge.

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Understanding the Costs Involved in Mutual Fund Investments The following table presents information on four different open-end mutual funds. Use the information in the table to answer the questions that follow. FUND NAV NET CHG YTD % RET GibEx p 11.32 -0.02 2.5 PwrSL r 30.77 0.08 5.4 PFIN 27.81 0.22 7.9 Majtrk 42.21 0.31 9.0 The mutual fund charges a back-end load fee. True or False: You can generally expect funds that charge back-end load fees to outperform funds that do not charge these fees. True

Understanding the Costs Involved in Mutual Fund Investments The following table presents information on four different open-end mutual funds. Use the information in the table to answer the questions that follow. FUND NAV NET CHG YTD % RET GibEx p 11.32 -0.02 2.5 PwrSL r 30.77 0.08 5.4 PFIN 27.81 0.22 7.9 Majtrk 42.21 0.31 9.0 The mutual fund charges a back-end load fee. True or False: You can generally expect funds that charge back-end load fees to outperform funds that do not charge these fees. True

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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A stock broker is required to keep $100,000 in low risk funds. He splits the money between a fund that has an interest rate of 9.2% and one that pays 8.6%. In the first year, the money earns $8960 in interest. How much of the $100,000 was invested in the fund with 9.2% interest? Fill in the blank with your answer.Type a numeric answer only, do not type the $ sign or commas.
The Wildwood Fund sells Class A shares with a front-end load of 3.5% and annual operating expenses of 1%. Class B Shares have a 12b-1 fees of 1.5% annually and annual operating expenses of 0.75%. You plan to sell the fund after 7 years. Assume a 10% annual return. Assume that your initial investment is $100. Is Class A or Class B the better choice? Group of answer choices Class A is the better choice Cannot determine the answer from the information given Neither one is better Class B is the better choice
Suppose you consider investing $1,000 in a load fund which charges a fee of 2%, and you expect the fund to earn 14% over the next year. Alternatively, you could invest in a no-load fund with similar risk that is expected to earn 9% and charges a 1/2 percent redemption fee. Which is better and by how much? a. Funds are equal b. Load fund by $32.65 c. Load fund by $50.55 d. No-load fund by $64.55 e. No-load fund by $44.30
You can earn thousands of dollars more from your mutual funds. The secret is to purchase no-load (no front-end commission) funds directly from companies specializing in this area. You can save 6.00% commission compared to "loaded" mutual funds when you buy no-load funds. That means you earn $3,750 more on a $20,000 investment over 9 years. In this situation, the average annual interest rate of the fund is most closely which answer below?
One year ago you bought 100 shares of a mutual fund for $14.50 per share, and you received a $0.52 per - share capital gain distribution during the past 12 months. The fund has an annual 12b-1 fee of 0.35 percent and an expense ratio of 1.65 percent. The market value of the fund is now $18. Calculate the total dollar return for this investment if you were to sell it now. (Convert and round to 2 decimals) Calculate the total percentage return for this investment if you were to sell it now. (Convert and round to 1 decimal)
An investor is considering two mutual funds. Fund A has a 5.75 percent front-end load and a 1.25 percent expense ratio. Fund B is no-load but has a 2.25 percent expense ratio. If the investor plans on being in either fund for six years, which should they choose given that they have $16,000 to invest and both funds have gross returns of 12 percent per year? Fees are applied at each year-end to year-end asset values, but the load is taken out up front only once.
Elise Carlo is adapting the cost averaging in investment. She decided to invest in a mutual fund for 6 months with a monthly investment of P4,500.00. The initial shares price of the fund was listed at P200 then decreases by 5% every month for a year. Compute for the average price using cost-averaging method.
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.
Suppose a (very skilled) fund manager earns a safe return of .70% per trading day. There are 252 trading days per year. (a) What will be your annualized holding period return on $100 invested in the fundif the manager allows you to reinvest in her fund the .70% you earn each day? (b) What will be your annualized holding period return assuming the manager putsall of your daily earnings into a zero-interest-bearing checking account and paysyou everything earned at the end of the 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%
Suppose an individual invests £25,000 in a load mutual fund. The load fund entails an up-front commission charge of 4 percent of the amount invested and is deducted upfront. In addition, annual fund operating expenses are 0.85 percent, which is charged on the average net asset value invested in the fund. The return on this fund is 6 percent each year paid on the last day of the year. What would be the investor’s return on this fund after one year?
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.