You Invest in a Mutual Fund That Charges a 3

question 73

Multiple Choice

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 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 one on a Class B investment of $20,000 if you redeem shares with no growth in value?

• A) 596
• B) 794
• C) 885
• D) 902

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Definitions:

Taxes

Mandatory financial charges imposed by governments on individuals, corporations, and transactions to fund public expenditures.

Hedge Funds

Investment funds that employ various strategies to earn active returns for their investors, often requiring a high minimum investment.

Arbitrage

A trading strategy that exploits price differences of identical or similar financial instruments on different markets or in different forms.

Derivatives Market

A market where financial instruments derived from other assets are bought and sold.