An investor is considering two mutual funds. Fund A has a 5.75 percent front-end load and a 1.25 percent expense ratio. Fund B is no-load,but has a 2.25 percent expense ratio. If the investor plans on being in either fund for six years,which should they choose given that they have $16,000 to invest and both funds have gross returns of 12 percent per year? Fees are applied at each year-end to year-end asset values,but the load is taken out up front only once.

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The Answer of An investor is considering two mutual funds. Fund A has a 5.75 percent front-end load and a 1.25 percent expense ratio. Fund B is no-load,but has a 2.25 percent expense ratio. If the investor plans on being in either fund for six years,which should they choose given that they have $16,000 to invest and both funds have gross returns of 12 percent per year? Fees are applied at each year-end to year-end asset values,but the load is taken out up front only once.

An Investor Is Considering Two Mutual Funds