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You are considering an investment in a mutual fund with a 7% load and expense ratio of 0.5%. You can invest instead in a bank CD paying 3% interest.
a. If you plan to invest for 5 years, what annual
Answer
Load Rate (L) = 7%
Expenses Ration (E) = 0.5%
CD Rate = 3%
Return of Mutual Fund = R
Number of Year - 5
Total investment will be same after five years
(1 + L) * ( 1+ R - E)n = (1+ CD)n
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