Question

When Jill Thompson received a large settlement from an automobile accident, she chose to invest $120,000 in the Vanguard 500 Index Fund. This fund has an expense ratio of 0.14 percent. What is the amount of the fees that Jill will pay this year

Answer 1

Answer:

$168

Explanation:

The expense ratio calculates Vanguard 500 index fund expenses as a percentage of total funds invested in a mutual fund.

In this case, it measures the percentage of Jill Thomson's investment in the fund that goes to paying management fees, by comparing the mutual fund management fees with his total assets in the fund.

However, all costs are shared amongst the investors.

Expense ratio = operating expenses/average value of fund asset

Expense ratio = 0.14%,

Amount to be paid = expense ratio x amount invested (0.14% * 120,000= 168)