Suppose You Consider Investing $5,000 in a Load Fund from Which

question 19

Multiple Choice

Suppose you consider investing $5,000 in a load fund from which a fee of 8% is deducted and you expect the fund to earn 12% over the next year.Alternatively,you could invest in a no load fund which is expected to earn 10% and which takes a 1/2 percent redemption fee.Which is better and by how much?

• A) Load fund by $320.50
• B) Load fund by $575.50
• C) Funds are equal
• D) No load fund by $320.50
• E) No load fund by $575.50

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Definitions:

Check-Cashing Outlets

Businesses that offer to cash checks for a fee, often serving customers who do not have access to traditional banking services.

Banking Services

Various financial services provided by banks, including loans, deposits, money transfers, and account management.

Money Orders

A financial instrument issued by a bank or postal service that allows the person named on the order to receive a specified amount of cash on demand, often used for payments when checks are not accepted.

Branch Banking

Banking operations in which a financial institution operates multiple branches, each providing banking services to customers.