You purchased $3,400 worth of shares in a mutual fund that does not have a front-end load. However, there is a back-end load of 5 percent if you sell in the first year, and it decreases one percentage point per year. You sell $800 worth of shares in the third year. How much will your back-end load be?
You purchased $3,400 worth of shares in a mutual fund that does not have a front-end load. However, there is a back-end load of 5 percent if you sell in the first year, and it decreases one percentage point per year. You sell $800 worth of shares in the third year. How much will your back-end load be?
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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![You purchased $3,400 worth of shares in a mutual fund that does not have a front-end load. However, there is a back-end load of 5 percent if you sell in the first year, and it decreases one percentage point per year. You sell $800 worth of shares in the third year. How much will your back-end load be?
$ [______]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe046ad9d-6bc6-4a66-9e32-8e018643196e%2F3c518fe3-29f5-4a55-87f2-74c577d99d93%2Fesy6r3_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You purchased $3,400 worth of shares in a mutual fund that does not have a front-end load. However, there is a back-end load of 5 percent if you sell in the first year, and it decreases one percentage point per year. You sell $800 worth of shares in the third year. How much will your back-end load be?
$ [______]
Expert Solution
Step 1: Define=back end load
In mutual fund the companies charge their fee on selling and the amount received is slightly less than the actual amount.
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