You purchased shares of a mutual fund at a price of $20 per share at the beginning of the year and paid a front-end load of 5.75%. If the securities in which the fund invested increased in value by 11% during the year, and the fund's expense ratio was 1.25%, your return if you sold the fund at the end of the year would be

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Quizplus · Accepted Answer

The initial investment is reduced by the front-end load, so you effectively invest $18.85 per share ($20 - 5.75% of $20). The fund's value increases by 11%, so the new value is $20.9235 per share. After accounting for the 1.25% expense ratio, the final value is $20.6614 per share. The return is calculated as ($20.6614 - $18.85) / $18.85 = 3.44%.

You Purchased Shares of a Mutual Fund at a Price