Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please asnwer the follwing questions using the correct financial math steps to solve them: You are considering an investment in a mutual fund with a

Please asnwer the follwing questions using the correct financial math steps to solve them:
You are considering an investment in a mutual fund with a 4% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 6% interest.
a) calculate the value of a $1000 investment in the CD after 2 years
b) calculate the value of a $1000 investment in the mutual fund if it earns 8.7% per year for 2 years Extra)
You invest $2000 in a mutual fund, which earns a rate of return of 10% over the next year and 5% the year after that. Its expense ratio is 0.50%.
The fund has a CDSC on it which imposes charges according to this schedule:
Sell within 1 year of purchase: 5%
Sell after 1 year but within the 2nd year after purchase: 4%
Sell after 2 years but within the 3rd year after purchase: 3%
Sell after 3 years but within the 4th year after purchase: 2%
Sell after 4 years but within the 5th year after purchase: 1%
How much do you have if you sell your shares on the last day of the 2nd year? The CDSC is applied to the lesser of original investment or the redemption/sale value.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Evolutionary Finance

Authors: Bartholomew Frederick Dowling

1st Edition

0230502199, 9780230502192

More Books

Students also viewed these Finance questions

Question

Describe some common hazards in the contemporary workplace

Answered: 1 week ago