You Have $16,000 to Invest in a Mutual Fund with a NAV

question 36

Multiple Choice

You have $16,000 to invest in a mutual fund with a NAV = $45. You choose a fund with a 4% front load, a 1% management fee, and a 0.25% 12b-1 fee. Assume that the management and 12b-1 fees are charged on year-end assets. The gross annual return on the fund's shares was 9%. What was your net annual rate of return to the nearest basis point?

• A) 3.33%
• B) 7.64%
• C) 6.25%
• D) 4.52%
• E) 4.64% {{[$16,000 * (1-0.04) * 1.09] * (1-0.0125)}/$16,000} - 1 = 3.33%

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Definitions:

Gigabyte Storage

Gigabyte storage refers to a digital storage capacity equivalent to approximately one billion bytes, often used to measure the size of memory or disk storage space.

Marginal Product

The additional output resulting from using one more unit of a particular input, holding other inputs constant.

Labor Hours

The total hours of work provided by employees or workers within a specific timeframe.

Marginal Rate

The rate of change of a variable as another variable changes, typically used in the context of taxes, substitution, or transformation rates.