Question

64. You purchased shares of a mutual fund at a price of $20 per share at...

64. You purchased shares of a mutual fund at a price of $20 per share at the beginning of the year and paid a front-end load of 5.75%. If the securities in which the fund invested increased in value by 11% during the year, and the fund's expense ratio was 1.25%, your return if you sold the fund at the end of the year would be

A. 4.33%.

B. 3.44%.

C. 2.45%.

D. 6.87%.

{[$20 × 0.9425 × (1.11 – 0.0125)] –$20}/$20 = 3.44%.

Can you explain where 0.9425 came from? I

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Answer #1

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