Question
You are considering an investment in a mutual fund with a 4% front-end load and an expense ratio of 1.1%. You can invest instead in
You are considering an investment in a mutual fund with a 4% front-end load and an expense ratio of 1.1%. You can invest instead in a bank CD paying 6% interest.
a) If you plan to invest for two 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. (Do not round intermediate calculations. Enter your answer as a decimal rounded to four decimal places.)
Annual rate of return:
b) If you plan to invest for six 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 (Do not round intermediate calculations. Enter your answer as a decimal rounded to four decimal places.)
Annual rate of return:
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Equity Valuation
Authors: Peter O Christensen, Gerald A Feltham
1st Edition
1601982720, 978-1601982728
