5-84 An investor purchases fund shares with a 3 percent front-end load and expects to hold the shares for 10 years.The annualized sales load incurred by the investor is _______ per year.

Question

Quizplus · Accepted Answer

The front-end load is a one-time charge that is paid when the investor purchases the fund shares. In this case, the front-end load is 3%.

Since the investor plans to hold the shares for 10 years, this means that the annualized sales load can be calculated by dividing the front-end load by the number of years held:

Annualized sales load = Front-end load / Number of years held

Annualized sales load = 3% / 10 = 0.3%

Therefore, the annualized sales load incurred by the investor is 0.3% per year, which is answer choice C.

5-84 an Investor Purchases Fund Shares with a 3 Percent