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snow_lady [41]
3 years ago
12

You purchased 3,000 shares of the New Fund at a price of $25 per share at the beginning of the year. You paid a front-end load o

f 4%. The securities in which the fund invests increase in value by 12% during the year. The fund's expense ratio is 1.8%. What is your rate of return on the fund if you sell your shares at the end of the year?
Business
1 answer:
iren2701 [21]3 years ago
3 0

Answer:

4.256%

Explanation:

Since the front load of 4% of the portfolio has been paid, therefore the value of the portfolio has been reduced to 96%(100%-4%).

The value of the investment has been increased by 10% with expense ratio of 1.8%, the rate of return on the fund on the shares at the end of the year shall be calculated as follows:

1+i=96%(1+10%-1.4%)

where i=rate of return on shares

1+i=1.04256

i=1.04256-1=4.256%

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