THIS IS ALL ONE QUESTION WITH THREE DIFFRENT PARTS You are...
50.1K
Verified Solution
Link Copied!
Question
Finance
THIS IS ALL ONE QUESTION WITH THREE DIFFRENT PARTS
You are considering an investment in a mutual fund with a 4% load and an expense ratio of .5%. You can invest instead in a bank CD paying 6% interest.
a) If you plan to invest for two years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns.
b) How does your answer change if you plan to invest for six years? Why does your answer change?
c) Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of .75% per year.
i. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD?
ii. Does your answer in this case depend on your time horizon?
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.