(A) Adequate information: The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%. To calculate: The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years Introduction: Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Question

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Answer 1

Question

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

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Answer 2

Question

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

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Answer 3

Question

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

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Answer 4

Question

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

Answer 6

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Answer 7

Chapter 4, Problem 26PS

Summary Introduction

(A)

Adequate information:

The investor wants to make an investment with an expense ratio of 0.5% and front end load of 4% in the mutual fund. The interest paid by the bank certificate of deposit accounts for 6%.

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 2 years

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Answer 8

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Answer 9

Summary Introduction

(B)

To calculate:

The annual rate of return that must be earned by the fund portfolio with the investment horizon of 6 year

Introduction:

Rate of return refers to the ratio of loss or profit ascertained in the financial year with respect to the investment which is generally expressed in percentage of decrease or increase in the investment's value during the given period of time.

Answer 10

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

Answer 11

Summary Introduction

(C)

To calculate:

The annual rate of return that must be earned by the fund portfolio if there exist 12b-1 fee of 0.75% instead of the front end load

Introduction:

A 12b-1 fee stands to be the annual distribution or makreting fee levied on the mutual fund. It is considered as an operational charges which is included under the expense ratio of the firm. It ranges between 0.25% to 1% of the net asset of the fund.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4 - Prob. 1PS Ch. 4 - Prob. 2PS Ch. 4 - Prob. 3PS Ch. 4 - Prob. 4PS Ch. 4 - Prob. 5PS Ch. 4 - Prob. 6PS Ch. 4 - Prob. 7PS Ch. 4 - Prob. 8PS Ch. 4 - Prob. 9PS Ch. 4 - Prob. 10PS

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Chapter 4 Solutions