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(1) Suppose today a mutual fund contains 2,000 shares of J.P. Morgan Chase, currently trading at $46.75, 1,000 shares of Wal-mart, currently trading at $70.10,

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(1) Suppose today a mutual fund contains 2,000 shares of J.P. Morgan Chase, currently trading at $46.75, 1,000 shares of Wal-mart, currently trading at $70.10, and 2,500 shares of Pfizer, currently trading at $27.50. The mutual fund has no liabilities and 10,000 shares outstanding held by investors. (2) Suppose an individual invests $10,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 4 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund annual operating expenses are 0.85 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 5 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the individual's net value of investment on the mutual fund at the end of year 1 and year 2. What is the annual compound return of this individual's investment over two years? (17%)

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