40. With respect to mutual funds, distinguish between front-end load and back-end load.

i. What is the difference between a balanced fund and asset allocation fund?

ii. The Realms Bank just created an investment trust fund. The fund is composed of fixed income securities of the government and corporate bodies acquired at a total value GHS300,000. The trustees will not vary the components of the fund. It is selling 1 million shares in the fund for GHS0.35 each. Investment in the fund will mature in a years time but investors who would want to cash out their investment before maturity can sell back to the fund.

Required:

(a) Would you describe the investment trust as a managed fund? Explain.

(b) Compute the net asset value of the fund now.

(c) Compute the premium or discount on the offer.