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16 October, 12:03

You purchased 2,200 shares of the New Fund at a price of $25 per share at the beginning of the year. You paid a front-end load of 3%. The securities in which the fund invests increase in value by 15% during the year. The fund's expense ratio is 2.4%. What is your rate of return on the fund if you sell your shares at the end of the year

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  1. 16 October, 12:32
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    rate of return 9.22%

    Explanation:

    15% return on fund value - 2.4% fund expenses = 12.6% net fund gain

    then, the shares were purchased with a loan which required to paiy 3% of interest up-front

    therefore, we didn't invest 100% of the loan but 97%

    0.97 x. 126 = 0,12222

    now, we subtract the 3% paid of interest:

    .1222-0.03 =.0922 = 9.22%
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Home » Business » You purchased 2,200 shares of the New Fund at a price of $25 per share at the beginning of the year. You paid a front-end load of 3%. The securities in which the fund invests increase in value by 15% during the year. The fund's expense ratio is 2.4%.
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