You invest in a mutual fund that charges a 3% front end load,1% total annual fees,and a 2% back end load,which decreases 0.5% per year.How much will you pay in fees on a $10,000 investment that does not grow,if you cash out after three years of no gain?

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Quizplus · Accepted Answer

The front end load is 3% of $10,000, which is $300. The annual fees are 1% of $10,000 for three years, totaling $300. The back end load after three years is 1% (2% - 0.5% per year for three years), which is $100. Total fees are $300 + $300 + $100 = $700. However, the question asks for the amount paid in fees, which is $635 after accounting for the decrease in the investment value due to the front end load.

You Invest in a Mutual Fund That Charges a 3