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1. The Victory Fund sells Class A shares with a front-end load of 4.5%. The fund sells Class B shares with 12b-1 fees of 0.75%
1. The Victory Fund sells Class A shares with a front-end load of 4.5%. The fund sells Class B shares with 12b-1 fees of 0.75% annually as well as back-end load fees that start at 3% and fall by 0.5% for each full year the investor holds the portfolio (that is 2.5% after one year, 2% after two years, and so on until the sixth year). Assume the portfolio rate of return net of operating expenses is 10% annually. [8 marks] a) If you plan to sell the fund after 3 full years, are Class A or Class B shares the better choice for you? Explain. [4m] b) What if you plan to sell after 8 full years? Explain [4m]
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