The Wildwood Fund sells Class A shares with a front-end load of 5% and class B s

Question

The Wildwood Fund sells Class A shares with a front-end load of 5% and class B shares with a 12b-1 fee of 1% annually. If you plan to sell the fund after 4 years, are Class A or Class B shares the better choice? Assume a 10% annual return net of expenses before the 12b-1 fee is applied. Class A Class B There is no difference The answer cannot be determined from the Information given. A mutual fund has total assets outstanding of $69 million. During the year the fund bought and sold assets equal to $17.25 million. This fund's turnover rate was 25 % 28.5 % 18.63% 33.4% Your investment has a 40% chance of earning a 15% rate of return, a 50% chance of earning a 10% rate of return, and a 10% chance of losing 3%. What Is the standard deviation of this investment? 5.14% 7.59% 9.29% 8.43% If you require a real growth in the purchasing power of your investment of 8%, and you expect the rate of inflation over the next year to be 3%, what is the lowest nominal return that you would be satisfied with? 3% 8% 11% 11.24% Consider a Treasury bill with a rate of return of 5% and the following risky securities: Security A: E(r) =0.15; variance = 0.0400 Security B: E(r) = 0.10; variance = 0.0225 Security C: E(r) = 0.12; variance = 0.1000 Security 0: E(r) = 0.13; variance = 0.0625 The investor must develop a complete portfolio by combining the risk-free asset with one

Explanation / Answer

Sol to q 8

Funds turnover rate= fund movement during the year/ total assets outstanding

                                     =17.25/ 69

                                       =.25

So ans should be (A)

Sol to q 9

Calculation of expected rate of return(Rx)=sum of (probability* rate of return)

                                                                   = (.40 *15)+ (.50*10)+(.10*-3)

                                                                     = 10.7

R      (R-Rx)       square of (R-Rx)               probability           sq dev * prob

15      4.3                       18.49                     .4                             7.396

10      -0.7                     0.49                         .5                            0.245

-3        -13.7                   187.69                    .1                            18.769

                                                                                  Total           26.41

Std deviation= 26.41

                          =5.14 ans

Sol to q 10

Real rate of return =(1+ Nominal rate)    -1

                                    ( 1+ inflation rate)

            .08 =              (1+N)    -1

                              (1+ .03)

          .08 =     1+N-1.03

                     1.03

       N= .1124

        Ans should be (d)

Sol to q 7

Ans can’t be determined from the info given

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