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: Cengage Learning
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Question
Chapter 13, Problem 2FPE
Summary Introduction
To calculate: The amount payable to purchase the given funds and the fund with 12b-fees, redemption fee funds, no loads fund, the highest year to date return fund and the lowest fund.
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Students have asked these similar questions
Q1. What is a mutual fund? In what sense is it a financial institution?.
Q2. How is the net asset value (NAV) of a mutual fund determined? What is meant by the term marked-to-market daily?
Q3. An investor purchases a mutual fund for $50. The fund pays dividends of $1.50, distributes a capital gain $2, and charges
a fee of $2 when the fund is sold on year for $52.50. What is the net rate of return from this insurance?
Formula for Question 3:
Net gain = Dividend + capital gain + profit from fund sold – fee
You are considering investing in one of several mutual funds. All the funds under consideration have
various combinations of front-end and back-end loads and/or 12b-1 fees. The longer you plan on remaining
in the fund you choose, the more likely you will prefer a fund with a
rather than (a)__
everything else equal.
a) 12b-1 fee; back-end load
b) front-end load; 12b-1 fee
c) 12b-1 fee; front-end load
d) front-end load; back-end load
e) 12b-1 fee; no load charge
Solve the problems listed below. Show your solution and box the final answer. (bond or yellow paper)
1. A fund is set up to charge a load. Its net asset value is P16.50 and its offer price is P17.30.
A. How much is the commission of the load?
B. What percentage of the offer price does the commission represent?
C. What percentage of the net asset value does the commission represent?
D. Assume the fund increased in value by .30 the first month after you purchased 100 shares. What is the total gain or loss? Compare the total current value with the total purchase amount.
E. By what percentage would the net asset value of the shares have to increase for you to break even?
2. Under peso-cost averaging, an investor will purchase P6,000 worth of stock each year for three years. The stock price is P40 in year 1, P30 in year 2 and P48 in year 3.
A. What is the share purchased in every year?
B. Compute the average price per share.
C. Compute the average cost per share.
3. Under peso-cost…
Chapter 13 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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