3. Expenses and management of mutual funds

Suppose you are considering investing $30,000 in one of two mutual funds: A or B. Mutual fund A is a load fund that charges 4.00%, while mutual fund B is a no-load fund.

If you invest in mutual fund A, your sales charge is

. This means that, of your initial $30,000 investment, your actual investment in the load fund is only

. If you invest in mutual fund B, you incur a sales charge.

True or False: Some large mutual funds have increased their expense ratios despite opportunities to capitalize on economies of scale.

True

False