FINANCE HW Chapter 4 Question 4 (of 5) 10.00 points You purchased 3,800 shares i

Question

FINANCE HW Chapter 4 Question 4 (of 5) 10.00 points You purchased 3,800 shares in the New Pacific Growth Fund on January 2, 2010, at an offering price of $42 per share. The front-end load for this fund is 5 percent, and the back-end load for redemptions within one year is 2 percent. The underlying assets in this mutual fund appreciate (including reinvested dividends) by 5 percent during 2010, and you sell back your shares at the end of the year. If the operating expense ratio for the New Pacific Growth Fund is 1.77 percent, what is your total return from this investment? should be indicated by a minus sign. Round your answer to 2 decimal places. omit the "%" sign in your response.) Total return References eBook& Resources Worksheet Leaming Objective: 04-02 How mutual funds operate Difficuity: Intermediat Section: 4.4 Mutual Fund Costs and Fees MacBook Air F3 000 F 2 3 4

Explanation / Answer

Initial NAV = 42*95% = 39.9

Final NAV = 39.9* (1+5%- 1.77%) = $41.19

Sale proceeds = 41.19* 98% = 40.36

Return on investment = (40.36-42)/ 42 =

-3.9%

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