a.
To calculate:
Example of net asset value for a mutual fund.
Introduction: Net asset value is the market value of the securities contain by mutual fund deducting its liabilities and then dividing it by number of shares outstanding.
a.
Answer to Problem 2FPA
Solution:
Net asset value is $10.
Explanation of Solution
For example, ABC mutual fund has a total asset of $100 million, $10 million of liability and 9 million of outstanding shares.
Given,
Total assets are $100 million.
Total liabilities are $10 million.
Total number of shares is 9 million.
The formula to calculate net asset value is,
Substitute $100 million for total assets, $10 million for total liabilities and 9 million for total number of shares in the above formula.
Net asset value is $10.
b.
To calculate:
Example of a load fund.
Introduction: A load fund refers to a fund on which investor pay certain fees known as a sales charge whenever they purchase shares.
b.
Answer to Problem 2FPA
Solution:
Amount of commission or load amount is $200.
Explanation of Solution
XY is a mutual fund on which a purchaser has pays a sales commission of 2% on the purchase of mutual fund. Mutual fund is worth $10,000:
Given,
Amount investing is $10,000.
Commission rate is 2%.
Formula to calculate amount of commission is,
Substitute $10,000 for amount investing and 2% for commission rate in the above formula.
Amount of commission or load amount is $200.
c.
To calculate:
Example of a no load fund.
Introduction: A no load fund refers to that fund on which no sales fees are charged on purchase of fund.
c.
Answer to Problem 2FPA
Solution:
When a person does not pay anything on the purchase of mutual fund it is called no load fund.
Explanation of Solution
A person purchases a YZ fund of $20,000 on which he has not paid any sales charge or sales load.
d.
To calculate:
Example of management fee for a specific mutual fund.
Introduction: Management fee refers to the fees charged by the mutual fund company from the investors for managing their investment or portfolio. Management fees typically range in between 0.25 to 1.5%.
d.
Answer to Problem 2FPA
Solution:
Management fee is $300.
Explanation of Solution
A person invested $30,000 in ZY mutual fund who charges annual management fees of 1%.
Given,
Total asset value is $30,000.
Management fee rate is 1%.
Formula to calculate management fee is,
Substitute $30,000 for total asset value and 1% for management fee rate in the above formula.
Management fee is $300.
e.
To calculate:
Example of mutual fund with contingent deferred sales load.
Introduction: Mutual fund with contingent deferred sales load refers to a fund on which sales fees is charged when the investor sales his mutual fund as except to charging in the starting of the fund.
e.
Answer to Problem 2FPA
Solution:
Amount of contingent deferred sales load that she needs to pay is $800.
Explanation of Solution
A person has $20,000 invested in QS mutual fund for four years and company charge deferred sales load if any person withdraw amount before 5 years he has to pay deferred load fees of 4%. Now, the person requires his money back.
Given,
Amount withdrawn is $20,000.
Withdrawal rate is 4%.
Formula to calculate amount of contingent deferred sales load is,
Substitute $20,000 for amount withdrawn and 4% for withdrawal rate in the above formula.
Amount of contingent deferred sales load that she needs to pay is $800.
f.
To calculate:
Example of mutual fund who charges 12b-1 fee.
Introduction: Expense ratio is the amount that an investor pays for all fees and operating cost. It may vary according to the different providers but for a good investment it should be less than one percent.
f.
Answer to Problem 2FPA
Solution:
12b-1 fee is $50.
Explanation of Solution
A person has invested $20,000 in a fund that charges 0.25% of 12b-1 fee annually
Given,
Total asset value is $20,000.
12b-1 fee rate is 0.25%.
Formula to calculate 12b-1 fee is,
Substitute $20,000 for total asset value and 0.25% for 12b-1 fee rate in the above formula.
12b-1 fee is $50.
g.
To calculate:
Example of expense ratio.
Introduction: Mutual fund is a product which is made by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.
g.
Answer to Problem 2FPA
Solution:
Amount that they will pay for expense is $600.
Explanation of Solution
A fund has an expense ratio of 2% annually. A person invested $30,000 in this fund.
Given,
Total asset value is $30,000.
Expense rate is 2%.
Formula to calculate expense amount is,
Substitute $30,000 for total asset value and 2% for expense rate in the above formula.
Expense amount or amount that they will pay for expense is $600.
Want to see more full solutions like this?
Chapter 16 Solutions
FIN 112(LL)-W/CONNECT >CUSTOM<
- Don't used hand raiting and don't used Ai solutionarrow_forwardCould you explain what are the Biblical principles researchers that can follow to mitigate researcher bias? How to use of Biblical ethics to synthesize the literature to avoid misrepresentation of the literature? How researchers can demonstrate Biblical ethics when collecting and analyzing data?arrow_forwardThe manager of company A is thinking about adding an air conditioner to the office. The AC will cost $1630 to buy and install. The manager plans to use the AC for 5 years and each year's depreciation rate is 18% of the purchase price. The manager expects to sell the AC in 5 years for $880.The tax rate is 15% and the company's WACC is 15%. If the manager considers this purchase of AC as an investment, what is the NPV (keep two decimal places and assume that the AC will not affect the operations of the company)?arrow_forward
- Problem 5-5 Calculating IRR A firm has a project with the following cash flows: Year Cash Flow 0 -$27,700 1 23 11,700 14,700 10,700 The appropriate discount rate is 18 percent. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR %arrow_forwardCould you help to explain: How researchers can demonstrate Biblical ethics when conducting a literature review? How researchers can demonstrate Biblical ethics when communicating with a research team or university committee? How researchers can demonstrate Biblical ethics when recruiting participants. Provide Biblical and/or scholarly support for all assertions?arrow_forwardCould you please help explain what is the Biblical ethics in research? How do they establish a firm ethical foundation based on Biblical principles? What should they do to reduce the researcher bias as well as misrepresenting the literature and study findings? How Christians would like to ensure of being obedient to God in the research and study conduct?arrow_forward
- I need answer typing clear urjent no chatgpt used pls i will give 5 Upvotes.arrow_forward< When you purchased your car, you took out a 5-year annual-payment loan with an interest rate of 5% per year. The annual payment on the car is $5,200. You have just made a payment and have now decided to pay off the loan by repaying the outstanding balance. What is the payoff amount for the following scenarios? a. You have owned the car for 1 year (so there are 4 years left on the loan)? b. You have owned the car for 4 years (so there is 1 year left on the loan)? a. You have owned the car for 1 year (so there are 4 years left on the loan)? The payoff if there are 4 years left on the loan is $ (Round to the nearest cent.) b. You have owned the car for 4 years (so there is 1 year left on the loan)? The payoff if there is 1 year left on the loan is $ (Round to the nearest cent.)arrow_forwardVictoria Exports (Canada). A Canadian exporter, Victoria Exports, will be receiving six payments of €13,800, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollars and U.S. dollars, it can choose which currency to exchange the euros for at the end of the various periods. Which currency appears to offer the better rates in the forward market? (Click on the icon to import the table into a spreadsheet.) Period Days Forward spot 1 month C$/euro 1.3347 1.3370 US$/euro 1.3219 1.3224 m 2 months 3 months 1.3392 30 60 1.3229 90 1.3235 180 1.3438 12 months 360 1.3464 1.3239 1.3269 6 months 1.3416 Calculate the forward premium, the Canadian dollar proceeds, and the difference from the spot rate proceeds in the C$/Euro forward market below: (Round the forward premium to three decimal places and the Canadian dollar amounts to the nearest cent.) Days Forward Premium C$ Proceeds of Difference Period Forward C$/euro on the C$/euro €13,800 Over Spot…arrow_forward
- identify the primary sources of financing, both traditional and alternative, accessible to companies seeking sources of funding. To do so, you should: Collect and curate data and documentary resources from various sources (magazine articles, newspapers, online content, working papers from various institutions, activity reports, performance reports, legal regulations, speeches, appearances, press conferences, etc.). Analyze the documentary content you have previously curated and collected. During your analysis, consider the context, location, timing, and target audience of the texts. Reference Article: One Park Financial. (2022). Best alternative business loans and financing for entrepreneurs. https://www.oneparkfinancial.com/blog/alternative-business-funding Questions: Identify and summarize the traditional financial avenues available to businesses. What are the most innovative financing options they could find? Open-ended question: if you were in the opposite position, as an…arrow_forwardXYZ stock price and dividend history are as follows: Beginning-of- $ 130 Dividend Paid at Year Year Price Year-End 2021 $ 2 2022 2023 153 2 2024 128 133 2 2 An investor buys five shares of XYZ at the beginning of 2021, buys another two shares at the beginning of 2022, sells one share at the beginning of 2023, and sells all six remaining shares at the beginning of 2024. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Arithmetic time-weighted average returns Geometric time-weighted average returns % % b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2021, to January 1, 2024. Note: Negative amounts should be indicated by a minus sign. Date 01/01/2021 01/01/2022 Cash Flow 01/01/2023 01/01/2024 b-2. What is the dollar-weighted rate of return? (Hint. If your calculator cannot calculate…arrow_forwardConsider the following two banks: Bank 1 has assets composed solely of a 10-year, 11.50 percent coupon, $1.5 million loan with a 11.50 percent yield to maturity. It is financed with a 10-year, 10 percent coupon, $1.5 million CD with a 10 percent yield to maturity. Bank 2 has assets composed solely of a 7-year, 11.50 percent, zero-coupon bond with a current value of $1,108,283.85 and a maturity value of $2,374,515.87. It is financed with a 10-year, 5.75 percent coupon, $1,500,000 face value CD with a yield to maturity of 10 percent. All securities except the zero-coupon bond pay interest annually. a. If interest rates rise by 1 percent (100 basis points), what is the difference in the value of the assets and liabilities of each bank? Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter the answers in dollars, not millions of dollars. Round your answers to 2 decimal places. (e.g., 32.16) Before Interest Asset Value After Interest…arrow_forward
Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education