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A mutual fund has a net asset value (NAV) of $6.83. They charge a load fee of 4.00% for all new investors. How much should
A mutual fund has a net asset value (NAV) of $6.83. They charge a load fee of 4.00% for all new investors.
How much should a new investor pay for a share in the fund?
My question: The formula given is Offer Price = NAV / ( 1 - Load % ). But why is it not NAV X Load %? Which is intuitive to understand as they pay a percentage on the NAV?
This formula I've been given means that the ACTUAL load fee is higher? Why is that?
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