You Are Investing $16,000 in a Mutual Fund That Charges

question 36

Multiple Choice

You are investing $16,000 in a mutual fund that charges a 3.50% front-end load. The offering price is $20.32 a share. What will your investment be worth immediately after your shares are purchased?

• A)$14,520
• B)$14,640
• C)$15,440
• D)$16,360
• E)$16,420

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Definitions:

Six-Sided Die

A six-sided die is a cube-shaped object used in gaming, with each side marked with one to six dots to represent values for random outcomes.

Expected Utility

A concept in economics and finance that represents the average outcome when individuals are faced with uncertain decisions, often used in the context of risk and decision making.

Warranties

Guarantees provided by the seller or manufacturer, asserting that a product will meet specified criteria of performance over a certain period, and offering remedies in case of failure.

Moral Hazard

A situation where one party engages in risky behavior or fails to act in good faith because another party bears the consequences of that behavior, often seen in insurance and financial sectors.