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19:54 PM Assignment - Invest... : [25 Marks) Question 2 (25 Marks): Brealey Domestic Equity Fund Ltd sells two types of share, A+ and B+,
19:54 PM Assignment - Invest... : [25 Marks) Question 2 (25 Marks): Brealey Domestic Equity Fund Ltd sells two types of share, A+ and B+, A+ shares are sold with front-end load fee of 7% whilst Type B+ shares are not subject front-end load fee but are charged to investment management fee of 1.5% per annum as well as exit (back-end load) fee that start at 14% and reduce by 2% for each full year the investor holds the portfolio (until the 7th year). The annual rate of return for both types of share is 20% (a) Calculate the value of a Rs 35.000 investment made by investor Mr Laurent Halpin in Type A+ shares if the shares are disposed after (1) one year and (ii) 6 years. [ 8 Marks] (b) Calculate the value of a Rs 35,000 investment made by investor Mrs Ava Halpin in Type B+ shares if the shares are disposed after (1) one year and (ii) 6 years. [14 Marks) (c) As an analyst, which types of share will you recommend the investor to buy? [ 3 Marks]
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