be considered in the selecu are not a significant indicator of future rates high
ID: 2764832 • Letter: B
Question
be considered in the selecu are not a significant indicator of future rates higher rates of return are associated with funds expenses and provide tax efficiency. Thus, no-loa over load funds, lower expense ratios are prefe should be avoided, and funds with lower port are preferred. In addition, funds in which the mem own significant shares in the fund, or at ture rates ol etstead with funds that minimize Thus, no-loads are pref ulTl. Thstead, rate ds that minimize 6. referable, 12b-1 fees ortfolio turnover ratios ratios are preferable, 12b-1 folio turnove ra which the members of the or at least in the fund famil tion, funds in which the members of tatios east in the fundf tend to have better performance as d manager owns shares in the fund. to have beter performance as do funds in which the my portolio 7. For some investors, particularly those with smaller amon mutual funds offer an efficiency that may well offset their n ts o of capital or those who want to invest on a programmatic b performance relative to various market indices. For man ual funds many inve may be the only vehicle available to them. MINICASE The $$$ Mutual Fund had a portfolio valued at $652 illion, $2 million in liabilities, and 30 illion shares outstanding at the start of the year. At year 0 7Explanation / Answer
1)
Initial NAV = Net assets / no.of shares outstanding
= 652 - 2 / 30
= 21.67
Therefore, option C is correct answer.
2)
New NAV = Net assets / no.of shares outstanding
New NAV = 802 - 2 / 32
= 25
Percentage increase in NAV = New NAV - Old NAV / Old NAV
= 25 - 21.67 / 21.67
= 15.37%
Therefore, option A is correct.
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