The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1

-Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year. How much of the load will an investor have to bear if she sells it off in the seventh year?

Question

The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1
 
-Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year. How much of the load will an investor have to bear if she sells it off in the seventh year?

Quizplus · Accepted Answer

A back-end load, also known as a redemption fee, is a fee charged to an investor when they sell their mutual fund shares. In this case, the back-end load starts at 6 percent and decreases to 0 percent in the seventh year. This means that if the investor sells the mutual fund in the seventh year, they will not have to pay any back-end load. Therefore, the answer is 0 percent of the load, which is choice B.

The Figure Given Below Shows the Demand Curves [D1 and D2]

The Figure Given Below Shows the Demand Curves [D₁ and D₂]