Calculate annual return on mutual funds-investment period

Assignment Help Financial Management

Reference no: EM13814570

Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3.0 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses (or 12b-1 fees) are 1.0 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 15 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual funds over the two-year investment period.

A. The individual’s actual investment, after the load fee is deducted:

B. Annual operating expenses:

C. Value of investment at end of year 1:

D. The investors return on the mutual fund investment after 1 year:

E. Value of investment at end of year 2:

F. Thus the investors annual return on the mutual fund over a 2 year period:

Reference no: EM13814570

Questions Cloud

Determine the present value of the bonds cash flows : The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 16 percent. Assume interest payments are made semi annually. Determine the present value of the bond’s cash flows if the required rate of retu..

What is the present value or worth of this bond : Assume a $1,000 face value bond has a coupon rate of 8.5 percent paid semi annually and has an eight-year life. If investors are willing to accept a 10 percent rate of return on bonds of similar quality, what is the present value or worth of this bon..

Principal amount for treasury inflation-protected security : Compute the annual interest payments and principal amount for a Treasury Inflation-Protected Security with a par value of $1,000 and a 3-percent interest rate if inflation is 4 percent in year 1, 5 percent in year 2, and 6 percent in year 3.

Assuming the employee actual annual investment : You deposit 5% of your $40,000 annual income in a 401(K) plan at the end of each year. Your employer matches 2% of your earnings. You expect the plan to earn 10% and you are in the 25% tax bracket. Assuming the employee actual annual investment is $3..

Calculate annual return on mutual funds-investment period : Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3.0 percent of the amount invested and is deducted from the original funds invested. calculate the annual return on the m..

What is the profit to the investment bank : An investment bank pays $32 per share for 3.0 thousand shares of CZS Company in a firm commitment stock offering. It then can sell those shares to the public for $35 per share. What is the listed stock price? What is the profit to the investment bank..

School full time for a masters degree : A friend wants to work for 2 years then return to school full time for a master’s degree. He can invest $1,000/month in a mutual fund that earns 6% annually, for 2 years. How much will he have saved under Option A?

Suppose call on stock with strike price-piece-wise function : Suppose a call on a stock with strike price X +1 cost $1 and a put on a stock with strike price X −1 and the same expiration date costs $1. Suppose the price of the stock on expiration date is given by ST. Find the payoff to the investor that holds b..

Holding period returns of each of the three bonds : Bonds A, B, C and D are zero-coupon bonds with par value $1,000 each and yields to maturity of 6 percent, 8 percent, 10 percent and 12 percent respectively. Bond A matures in one year, bond B in two, bond C in three and bond D in four years. write ex..

User Account

All Pages