The Hirt & Block mutual fund has assets of $147 million, liabilities of $7 million and 7 million shares outstanding. The shares trade at $21.60 per share. What is the percentage load fee?

Question

Quizplus · Accepted Answer

To find the percentage load fee, we need to first calculate the net asset value (NAV) per share:

NAV per share = (assets - liabilities) / number of shares outstanding
NAV per share = (147 - 7) / 7
NAV per share = 20.00

The load fee is the difference between the offer price (what investors pay) and the NAV per share. Since the shares trade at $21.60 per share and the NAV per share is $20.00, the load fee is:

Load fee = offer price - NAV per share
Load fee = $21.60 - $20.00
Load fee = $1.60

To calculate the percentage load fee, we divide the load fee by the offer price and multiply by 100%:

Percentage load fee = (load fee / offer price) x 100%
Percentage load fee = ($1.60 / $21.60) x 100%
Percentage load fee = 7.41%

Therefore, the answer is C.

The Hirt & Block Mutual Fund Has Assets of $147