23. Funds XYZ and ABC have the following as shown below. If you will invest$50,000 and expect a rate of return on both funds 14%, which statement isCORRECT? (*Note that the Back-End load declines by 1% annually) *Fund XYZFund ABCFront-End load0%6%Back-End Load5%9*0%12B-1 fees1%0.75%Expense Ratio0.5%0.25%A) Fund ABC is better than Fund XYZ since value of investment in 4 years is greater.B) Fund XYZ is better than Fund ABC since value of investment in 4 years is greater.C) Value of investment of Fund ABC in 6 years $97,851.73D) B & CE) None of the above

Answer: B & C Solution: Value of Investment = Investment×(1-front end load)×(1+r-true expense…

23. Funds XYZ and ABC have the following as shown below. If you will invest $50,000 and expect a rate of return on both funds 14%, which statement is CORRECT? (*Note that the Back-End load declines by 1% annually) * Fund XYZ Fund ABC Front-End load 0% 6% Back-End Load 5% 0% 12B-1 fees 1% 0.75% Expense Ratio 0.5% 0.25% A) Fund ABC is better than Fund XYZ since value of investment in 4 years is greater. B) Fund XYZ is better than Fund ABC since value of investment in 4 years is greater. C) Value of investment of Fund ABC in 6 years $97,851.73 D) B & C E) None of the above

23. Funds XYZ and ABC have the following as shown below. If you will invest $50,000 and expect a rate of return on both funds 14%, which statement is CORRECT? (Note that the Back-End load declines by 1% annually) Fund XYZ Fund ABC Front-End load 0% 6% Back-End Load 5% 0% 12B-1 fees 1% 0.75% Expense Ratio 0.5% 0.25% A) Fund ABC is better than Fund XYZ since value of investment in 4 years is greater. B) Fund XYZ is better than Fund ABC since value of investment in 4 years is greater. C) Value of investment of Fund ABC in 6 years $97,851.73 D) B & C E) None of the above

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Activity 3 You are given the following information on three funds. The risk free rate is 6%. Calculate the differential return measure. Interpret your findings. Fund CH- G I Actual Return 15 25 30 Market Return 20 20 20 Sigma² 16 25 36
In the above $110K allocation problem, you decided to allocate 30% weight in A, 50% weight in B, 20% weight in C, and you want to find its AVG return. Which of the following is the appropriate method to find the mean (AVG) return on the $100K fund invested? a. Weighted Average (WAVG ) b. Simple Average c. Geometric Average d. Arithmetic Average
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You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRs of the two projects? b. If your discount rate is 4.7%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 Project A Year 1 - -$51 $27 B - $101 $22 Year 2 $21 $42 Year 3 $20 Year 4 $13 $51 $59 - ☑
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What is the present value of an investment with the following cash flows? Year 1 $14,000 Year 2 $20, 000 Year 3 $30,000 Year 4. $ 43,000 Year 5. $ 57,000 Use a 7% discount rate, and round your answer to the nearest $1. a. $128, 487 b. $107, 328 c. $112, 346 d. $ 153, 272
Dixon Sisters has a project with the after-tax cash flows shown below. The required return (cost of capital) on the investment is 10%. Compute the: Payback b. Discounted payback c. NPV d. Profitability index e. IRR MIRR YEAR 0 1 2 3 4 Cash flow −70,000 30,000 30,000 30,000 20,000

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