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Homework Solutions 8 61.300

68 780 872 1 d there is no evidence of superior

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Unformatted text preview: 7.80% $8.72 1 d) There is no evidence of superior performance. e) Through a management fee (plus expenses) that normally equals about .75 to 1.25 percent of the assets managed. Actually, load funds have a similar fee. Actually, the above is the “book” answer, but the question is a bit misleading. The “return” to the investors is obtained from the stocks in the fund (increase in NAV + distributions from dividends and capital gains). For the load fund you pay a commission to a broker, while the no-load fund might use part of the fee for expenses to advertise and sell the fund directly to investors. 4. a) New NAV Number of shares Current value $8.72 + $.32 = $ 9.04 × 300 $2,712 Offer price Number of shares Purchase amount $ 9.40 × 300 $2,820 Loss ($108) b) You must earn the load of $.68 on the net asset value of $8.72. The answer is 7.80 percent. This is the same as the answer to 3 c) above. Load $.68 = = 7.80% NAV $8.72 5. Ending NAV Beginning NAV Change in NAV $25.40 – 21.20 $ 4....
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