The Investments Fund sells Class A shares with a front-end load of 6% and Class C shares with 12b-1 fees of 0.75% annually as well as back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume that you have $1,000 to invest and the portfolio rate of return net of operating expenses is 12% annually. Required: a-1. If you invest in each fund and sell after 4 years, how much will you receive from each sale? a-2. Are Class A or Class C shares the better choice for you? b-1. If you invest in each fund and sell after 14 years, how much will you receive from each sale? b-2. Are Class A or Class C shares the better choice for you?
The Investments Fund sells Class A shares with a front-end load of 6% and Class C shares with 12b-1 fees of 0.75% annually as well as back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume that you have $1,000 to invest and the portfolio rate of return net of operating expenses is 12% annually. Required: a-1. If you invest in each fund and sell after 4 years, how much will you receive from each sale? a-2. Are Class A or Class C shares the better choice for you? b-1. If you invest in each fund and sell after 14 years, how much will you receive from each sale? b-2. Are Class A or Class C shares the better choice for you?
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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Transcribed Image Text:The Investments Fund sells Class A shares with a front-end load of 6% and Class C shares with 12b-1 fees of 0.75% annually as well as
back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume that you
have $1,000 to invest and the portfolio rate of return net of operating expenses is 12% annually.
Required:
a-1. If you invest in each fund and sell after 4 years, how much will you receive from each sale?
a-2. Are Class A or Class C shares the better choice for you?
b-1. If you invest in each fund and sell after 14 years, how much will you receive from each sale?
b-2. Are Class A or Class C shares the better choice for you?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req B1
Req B2
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