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What annual rate of return must the fund portfolio earn

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Reference no: EM132819088

You are considering an investment in a mutual fund with a 5% load and an expense ratio of 0.85%. You can invest instead in a bank CD paying 7% interest.

Problem 1: If you plan to invest for six 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. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Problem 2: Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 1.10% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM132819088

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