You must choose between a no-load, open-end mutual fund with an annual expense ratio of 0.85 percent but no transaction cost or an ETF with an annual expense ratio of 0.25 percent and a transaction cost of $20.00. a. Calculate which is the lower cost alternative to purchase. b. Calculate which is the lower cost to own over 6 months, if you sell after 7 percent gain. c. Calculate which is the lower cost to own over 2 years, if you achieve a 10 percent per year gain.

You must choose between a no-load, open-end mutual fund with an annual expense ratio of 0.85 percent but no transaction cost or an ETF with an annual expense ratio of 0.25 percent and a transaction cost of $20.00. a. Calculate which is the lower cost alternative to purchase. b. Calculate which is the lower cost to own over 6 months, if you sell after 7 percent gain. c. Calculate which is the lower cost to own over 2 years, if you achieve a 10 percent per year gain.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 2FPE

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