You've invested $1,000 in a mutual fund with a 6% front-end load, an expense ratio of 1% and a back-end load of 4%. Expenses are paid at the end of each year. The fund produces an annual return of 4% before fees.

Attempt 8/10 for 10 pts.

Part 1

What is your annual return after fees if you hold the fund for 3 years?

Future value of your $1,000 investment:

= 1,000(10.06)((1+0.04)(10.01))3(10.04)1,000(1-0.06)((1+0.04)(1-0.01))3(1-0.04)

= 984.93984.93

Annual return:

=(984.931,000)13-1= -0.00505

Correct

Part 2

What is your annual return after fees if you hold the fund for 30 years?