Question

Tim Jones bought 100 shares of a mutual fund ABC at $5.25 with no load. And 100 shares of DEF at $6 which had a load of $275.

Answer 1

Question Completion:

Evaluate the two investments, assuming shares of ABC were sold at $10.00 each, while those of DEF were sold at $15 each.  Which investments yielded the higher return?

Answer:

Tim Jones

Investment in DEF yielded the higher return of $1,225 (net proceeds) than ABC's return of $1,000.

Step-by-step explanation:

a) Data and Calculations:

Investments in ABC and DEF:

                                          ABC           DEF

Investment (shares)          100           100

Unit price of shares         $5.25        $6.00

Total investments            $525        $600

Selling price per share    $10           $15

Sales proceeds              $1,000     $1,500

Investment commission   ($0)        ($275)

Net proceeds from sale $1,000     $1,225

b)  The above calculations show clearly that the investment in DEF with a load of $275 yielded the higher returns than investment in ABC with no load.  This result suggests that the investment load may not be the only factor for rejecting an investment, but its net proceeds.

Answer 2

Answer:

Step-by-step ex975.00 - 1,200

200 - 123 - 850

planation: