Asked by Hailey Gallant on May 26, 2024
Verified
You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees, and a 0% back-end load on Class A shares. The same fund charges a 0% front-end load, 1% total annual fees, and a 2% back-end load on Class B shares. What are the total fees in year 1 on a Class A investment of $20,000 with no growth in value?
A) $658
B) $794
C) $885
D) $902
Front-end Load
A fee charged to investors when they purchase shares in a mutual fund, usually used to compensate brokers or sales agents.
Back-end Load
A fee charged to investors when they redeem shares from a mutual fund, typically used to compensate financial advisors.
Annual Fees
Regular charges imposed once a year for the use of a service or the participation in an investment or credit facility.
- Become familiar with the organizational structure and different charges applicable to mutual funds and their effect on the financial outcomes for investors.
Verified Answer
BE
Brittany E HawkinsMay 29, 2024
Final Answer :
B
Explanation :
First-year fees = 20,000 - (20,000 × .97 × .99) = 794
Learning Objectives
- Become familiar with the organizational structure and different charges applicable to mutual funds and their effect on the financial outcomes for investors.