Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. this is all one question with three diffrent parts

THIS IS ALL ONE QUESTION WITH THREE DIFFRENT PARTS You are...

50.1K

Verified Solution

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?

Answer & Explanation Solved by verified expert
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!
Become a Member

Other questions asked by students

Q

1.) During Phloem transport, which of the following occur at, or close to the SINK? Select...

Biology
Q

Sasibai Kimis left a successful career in finance to start the award-winning social enterprise, Earth Heir...

General Management
Q

Use the May 31 fiscal year-end information from the following ledger accounts (assume that all accounts...

Accounting
Q

absorbing nutrients from their environs Because of the ability to convert from an autotrophic to...

Biology
Q

Which of the following statements is false Question Type Single Correct Type 1 2 3...

Physics
Q

el 11 53 The power radiated by a black body is P and it e...

Physics
Q

Gil Hennesey invested 8 000 in the Adrian Utility Mutual Fund Type A which has...

Basic Math
Q

P17-11 (Equity InvestmentsAvailable-for-Sale) Castleman Holdings, Inc. had the following available-for-sale investment portfolio at January 1,...

Accounting
Q

ASAP Required information [The following information opalies to the questions displayed...

Accounting
Q

On December 31,2021, the end of its first year of operations, Pharoah Company owned the...

Accounting
Q

Enter Answers Correct Answers Below Below Points as marked - 16 QUESTIONS TOTAL Q1) Suppose...

Finance
Q

The spot exchange rate is $1.40 per pound. The interest rates in US and UK...

Finance