Question 1 Fund ABC charges a 12b-1 fee of 1.10% and maintains an expense ratio of .85%. Fund XYZ charges a front-end load of 3% but has no 12b-1 fee and an expense ratio of .15%. Assume the rate of return on both funds portfolios (before any fees) is 6% per year. Suppose you invest $1000 in each fund. Compute the value of the investments after the end of year 1, year 3, and year 10. Question 2 You are considering an investment in a mutual fund with a 5% front-end load fee and expense ratio of 0.25%. You can invest instead in a bank CD paying 2% interest. (a) If you plan to invest for 3 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. b) How does your answer change if you plan to invest for 7 years? Why does your answer change