You are considering investing $1,000 in a load fund which charges a fee of 2.5%,with an expected return of 12% over the next year.Alternatively,you could invest in a no-load fund with similar risk that is expected to earn 8% and charges a 1/2 percent redemption fee.Which is better and by how much?

Question

Quizplus · Accepted Answer

Laad Fund: $\quad \$ 1,000 ( 1.00 - 0.025 ) ( 1.12 ) = \$ 1092.00$
Na-Laad Fund: $\quad \$ 1,000 ( 1.08 ) ( 1.00 - 0.005 ) = \$ 1074.60$ 
The difference is 1092.00 - 1074.60 = $17.40
Load fund is better by $17.40.

You Are Considering Investing $1,000 in a Load Fund Which