Business

Alexzander Miller

30 April, 03:43

You are considering an investment in a mutual fund with two share classes, A and B. Class A has back-end load that start at 4% and fall by 1% for each full year the investor holds the portfolio (until the fourth year) and management fee of 0.5%. Class B has no load but has management fee of 0.5% and 12b-1 fee of 1%. Suppose the gross return of this fund is a constant 10% per year. If you plan to invest for 2 years, your holding-period return from the two share classes would be

17.5% and 17.7%

15.1% and 17.7%

17.5% and 18.8%

15.1% and 18.8%

None of the above options is correct.