High Growth Fund has a front load of 5% and expected return of 14.5%. Normal Fund has no load. And expected return of 13.8%. Which fund would you hold if you expect to hold the fund for 5 years? How about holding the fund for 10 years? Please show how to solve in excel
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- 4. Suppose a (very skilled) fund manager earns a safe return of 0.7% pertrading day. There are 252 trading days per year. (a) What will be your annualized holding period return on $100 invested in the fundif the manager allows you to reinvest in her fund the 0.7% you earn each day? (b) What will be your annualized holding period return assuming the manager putsall of your daily earnings into a zero-interest-bearing checking account and paysyou everything earned at the end of the year?You are considering an investment in a mutual fund with a 5% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 3% interest. Required: a. If you plan to invest for 4 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. What annual rate of return must the fund portfolio earn if you plan to invest for 6 years to be better off in the fund than in the CD? c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. Annual rate of return b. Annual rate of return c. Annual rate of return % % %A fund starts the year with NAV 46 per share. Over the year, the fund pays out income of 2.5 per share and capital gains distributions of 2.5 per share. Assets in the portfolio grew (shrank) by -0.0025, and an expense ratio of 0.014 is charged at the end of the year.. What is the rate of return on the fund? (Hint: calculate NAV1 first) O 0.0969 O 0.1076 O 0.1002 O 0.0877 O 0.0922
- You are considering an investment in a mutual fund with a 5% load and an expense ratio of 0.75%. You can invest instead in a bank CD paying 3% interest. Required: 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. What annual rate of return must the fund portfolio earn if you plan to invest for 6 years to be better off in the fund than in the CD? c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.50% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.You are considering an investment in a mutual fund with a 4.5% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 3.5% interest. If you plan to invest for 5 years, what annual rate of return (i.e. gross ret) must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding.You identify an investment project with the following cash flows. If the discount rate is 10%, what is the present value of these cash flows? Y1- $500 Y2- $550 Y3- $800 Y4- $450. Please type answer no write by hend.
- You are considering an investment in a mutual fund with a 4% load and an expense ratio of .5%. You can invest instead in a bank CD paying 6% interest.a. If you plan to invest for 2 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 6 years? Why does your answer change?c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of .75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Does your answer in this case depend on your time horizon?7. Impacts of Costs on Returns. A mutual fund has a 1.6% expense ratio and begins with a $124.655 NAV. It experiences the annual returns shown below. What are the end-of-year NAVS after fees for each year? What are the after-fee returns each year? (LO 4-4) Money to Invest NAV Expense ratio Year 1 return Year 2 return Year 3 return Year 4 return Year 5 return $ 10,000.00 $ 124.655 1.6% 5% -12% 18% 4% 23%23. Funds XYZ and ABC have the following as shown below. If you will invest $50,000 and expect a rate of return on both funds 14%, which statement is CORRECT? (*Note that the Back-End load declines by 1% annually) * Fund XYZ Fund ABC Front-End load 0% 6% Back-End Load 5%9* 0% 12B-1 fees 1% 0.75% Expense Ratio 0.5% 0.25% A) Fund ABC is better than Fund XYZ since value of investment in 4 years is greater. B) Fund XYZ is better than Fund ABC since value of investment in 4 years is greater. C) Value of investment of Fund ABC in 6 years $97,851.73 D) B & C E) None of the above
- Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.65%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and has an expense ratio of 0.35%. Assume the rate of return on both funds’ portfolios (before any fees) is 7% per year. Required: How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund How much will an investment of $100 in each fund grow to after 4 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund How much will an investment of $100 in each fund grow to after 11 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy FundWhich of the following statements is true about the time value of money? a.The present value of a future amount will be greater if funds earn 5% instead of 10%. b.The present value of a single sum will be unaffected by the rateof return at which funds grow. c.The present value of a future amount will be greater if funds earn 12% instead of 6%. d.The present value of a future amount will be unaffected by howfar in the future funds would be received.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. Required: 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. Round your answer to 2 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. Round your answer to 2 decimal places.) Annual rate of return % Annual rate of return % c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? (Do not round intermediate…