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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An investor pays the following separate amounts into a fund: £12,100 at t=7 years, £17,900 at t=13 years and £12,300 at t=28 years. The fund pays an effective quarter-yearly rate of discount of 2.3% during the first 7 years and an effective half-yearly rate of interest of 4.9% for the remaining period until the end of year 28. Assuming that no withdrawals are to be made throughout the entire term of this investment, calculate the present value of the fund (correct answer = 12422.19, no tables, only formulas, please)
QuantAlpha fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.75%. Assume the rate of return on fund portfolio (before any taxes) is 6% per year. How much will an investment of $1000 in the fund grow to after 10 years?
i need both
The Bissette LLC Fund is looking to buy bonds with a $1,000 face value, an 8% coupon, payable semiannually, and a maturity of 5 years. Currently, the bond sells at $880.00. What is the yield to maturity?
A pension fund has a liability of £65000 to be paid precisely in 4 years time. It wants to Reddington immunise this liability with P 3-year zero coupon bonds and Q 5-year zero coupon bonds, where P and Q are to be determined. Interest is compounded continuously with rate 2%. What is the present value, effective duration and convexity of the liability?
You pay $21,600 to the Laramie Fund, which has an NAV of $18 per share at the beginning of the year. The fund deducted a front-end load of 4% at the time of the purchase. The securities in the fund then increased in value by 10% during the year. The fund's expense ratio is 1.3% and is deducted from year-end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? Select the answer closest to the correct return. (Hint: The formula on slide #23 in the "Mutual Funds, ETFs, ..." slide set solves for the gross return. Your rate of return would be the gross return minus 1. The formula on slide # 23 can be written as X(1-f)(1+r-a)" (1-b) Gross Return = (1 - f)(1+r-a)" (1-b) or as Gross Return = X where X is the dollar amount invested. The other variables in the formula (f, r, a, n, b) are all defined in the slide set and in the lecture.) 4.2% 10% 8.7% O 4.7%
You have $5,000 to invest You are comparing two investment funds. Fund A returns 4%/yr compounded monthly Fund B returns 4.05% compounded quarterly. Which should you choose and why?
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?
Suppose MajTrk has a front-end load fee of 7%. If you purchase 100 shares of this fund at the NAV, you will pay a commission of . If, in one month, you sell the shares, you pay a redemption fee at that time. If you are interested only in funds without any fee, you to use additional online resources to find no-load funds, because using only the quotations as listed in the table, it is to determine the amount of any front-end load fee that the fund may charge.
You make single investment of $500 in mutual fund earning 8% annual interest which is compounded monthly. You leave it in the fund for 6 years. After 6 years, you begin depositing $80 per month into the fund. You do this for the next 14 years, A.) How much is in the fund after the first 6 years? Round to the nearest cent B.) How much is in the fund after all 20 years (6+14 years)?Round to the nearest cent
Vijay
You are considering three investments: Bond that is selling in the market at $1,200. The bond has a $1,000 parvalue, pays interest at 14 percent, and is scheduled to mature in 12 years.For bonds of this risk class, you believe that a 12 percent rate of returnshould be required. Preferred stock ($100 par value) that sells for $80 and pays an annualdividend of $12. Your required rate of return for this stock is 14 percent. Common stock ($35 par value) that recently apaid a $3 dividend. The firm’sreturn on equity is 12.3%. The firm’s earning per share was $5.50 and itpaid $3.20 in dividends per share. The stock is selling for $25, and you thinka reasonable required rate of return for the stock is 20 percent. Required: a. Calculate the value of each security based on your required rate ofreturn. b. Which investment(s) should you accept? Why?

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