The Bull Fund offers three classes of shares for investors. Class A shares charge a 2.00% front-load, 0.00% 12b-1, and 1.00% management fee. Class B shares charge a 1.00% front-load,0.00% 12b-1, and 1.25% management fee. Class C shares have no load and charge 0.75%12b-1, and 0.75% management fee. Assume the expected rate of return (before fees) on thefund is 8% and you intend to invest $10,000. Which class would you prefer if your holdingperiod is three years?DataClass AClass BClass CFront load2.0%1.0%0.0%12b-1 fee0.00%0.00%0.75%Mgt fee1.00%OB, shares, because the value will be $12,127.41OC shares, because the value will be $12,059.50OC shares, because the value will be $12,079.50O B, shares because the value will be $12,197.001.25%0.75%

We need to consider the impact of fees on the overall return. While Class B offers a lower upfront…

Answered: The Bull Fund offers three classes of…

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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Suppose ABC Mutual Fund had no liabilities and owned only four stocks as follows: Stock Shares Price Market Value 1,100 $1 $12,100 1,300 15 19,500 Y 1,500 24 36,000 800 16 12,800 $80,400 The fund began by selling $54,000 of stock at $9.00 per share. What is its NAV? Do not round intermediate calculations. Round your answer to the nearest cent.
5. Comparing loads and fees Claire wants to buy shares in a mutual fund and has narrowed her selection to the following four funds. Answer the questions below to help assess each fund in terms of the fees each charges. Fund NAV Net Chg. YTD % Ret. MinT p $15.32 -0.05 2.5 IntRA r $18.77 0.05 5.4 MRGG r $27.81 0.19 7.9 MajTrkⁿ $45.21 0.28 9.0 Suppose MajTrkⁿ charges a commission of 8%. This_________an example of a relatively low-load fund. If Claire purchases $4,000 worth of MajTrkⁿ shares, only $___________will actually be invested. This means that the commission—as a percentage of the amount invested—is equal to . The mutual fund MinT p is a no-load fund that imposes a_________on reinvested dividends as well as on the initial investment. Funds that charge this type of fee _________ generally be expected to outperform funds that do not charge these fees. Claire is planning on holding her shares for at least a year and wants a fund that…
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You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees, and a 0% back-end load on Class A shares. The same fund charges a 0% front-end load, 1% total annual fees, and a 2% back-end load on Class B shares. What are the total fees in year 1 on a Class B investment of $20,000 if you redeem shares with no growth in value? $600 $902 $596 $885
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