At the start of the year, you invest $2,000 in fund A. To invest in fund A, you have topay 4% of your initial wealth as commissions (called front-end loads). During the year,the fund NAV increases from $4 to $4.4. If the expense ratio amounts to 2% peryear, what is the annual growth rate of your wealth?5.6%10.0%8.0%6.6%

Mutual fund have expenses that reduces the overall return on the mutual fund.

At the start of the year, you invest pay 4% of your initial wealth as commissions (called front-end loads). During the fund NAV increases from $4 to $4.4. If the expense ratio amounts to 2% year, what is the annual growth rate of your wealth? 5.6%

At the start of the year, you invest pay 4% of your initial wealth as commissions (called front-end loads). During the fund NAV increases from $4 to $4.4. If the expense ratio amounts to 2% year, what is the annual growth rate of your wealth? 5.6%

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 23E: Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The...

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Question

At the start of the year, you invest $2,000 in fund A. To invest in fund A, you have to
pay 4% of your initial wealth as commissions (called front-end loads). During the year,
the fund NAV increases from $4 to $4.4. If the expense ratio amounts to 2% per
year, what is the annual growth rate of your wealth?
5.6%
10.0%
8.0%
6.6%

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