1. Use the information below to answer Question 1 (8 points; Parts a-c) 3 18 Suppose you are a mutual fund manager and that your fund has no liabilities You decide to use all your fund's assets to submit a market buy order of 25 shares to the following order book Price Shares $ 110.00 $ 109.00 $ Offers 108.00 $ 107.00 $ 106.00 $105.00 $ 103.00 $ 102.00 Bids $ 100.00 $ 99.00 $ 98.00 11 4 25 2 15 12 15 21 8 One year later, you decide to sell your 25 shares and submit a market sell order of 25 shares to the following order book. Price $ 135.00 $ 134.00 $ 133.00 132.00 $ 131.00 $130.00 $ 127.00 $ 126.00 $ 124.00 $ 123.00 $ 122.00 Shares 14 1 23 9 18 25 Offers 12 Bids 19 15 27 25 a) What is your fund's return gross of fees? Return gross of fees ? b) What return gross of fees would you have earned if you were able to make your trades at the market value of the stock (Assume that the midpoint of the top of the book is the market value)? Hypothetical return gross of fees ? c) Assume that the fund charges a 0.75% annual fee and a back-end load of 4% that decreases by 1% each year. If the investor holds the fund for one year before redeeming her shares, what is her net return, net of fees? Return net of fees